The companies have not disclosed financial terms of the transaction.
The three-party agreement is part of a global strategic alliance between Merck and Pfizer to jointly develop and commercialise avelumab.
Under the deal, the companies will jointly develop the CDx to evaluate programmed death-ligand 1 (PD-L1) protein expression levels in tumour tissue and its microenvironment, including tumour-associated immune cells.
The investigational CDx is part of protocols in ongoing clinical trials of avelumab, some of which will be reported at upcoming scientific congresses.
Avelumab, which is the proposed International Nonproprietary Name (INN) for the anti-PD-L1 monoclonal antibody (MSB0010718C), is under clinical investigation and was not approved for use in the US, EU, Canada or in any part of the world.
The drug is said to have the potential to allow activation of T cells and the adaptive immune system, by inhibiting PD-L1 interactions.
It is considered to engage the innate immune system and induce antibody dependent cell-mediated cytotoxicity (ADCC) through retaining a native Fc-region.
Last November, Merck and Pfizer partnered to co-develop and co-commercialise avelumab.
In May 2014, Dako and Merck collaborated to develop a companion diagnostic test for analysis of the potential tumour biomarker PD-L1 to assist in the treatment of cancer.
The test will be evaluated as part of the clinical development programme for Merck’s investigational anti-PD-1 antibody being studied for the treatment of cancer.