SAN FRANCISCO – Novartis AG moved to expand its immuno-oncology pipeline Monday through a strategic alliance and licensing agreement with Cambridge, Mass.-based Surface Oncology Inc. worth up to $170 million in up-front, equity and near-term milestone payments.

The agreement gives Novartis exclusive access to Surface's lead program and options to license up to three additional programs from its existing portfolio, exercisable at the filing of an investigational new drug application for each. It will test each candidate in both monotherapy and combination approaches.

Surface is eligible to receive clinical and commercial milestones and up to double-digit royalties on product sales. It also has the option to retain U.S. development and commercialization rights for at least half of the collaboration's programs. Just about a year ago, the small company closed a $35 million series A round led by Atlas Venture, which initially seeded the company in 2014, and Novartis Institute for Biomedical Research, Amgen Ventures and Elliott Sigal, former head of R&D at Bristol Myers Squibb.

The four preclinical programs included in the deal target regulatory T-cell populations, inhibitory cytokines and immunosuppressive metabolites in the tumor microenvironment. Together, they'll fit into a R&D portfolio of more than 200 ongoing projects on which the company is spending more than $9 billion per year, CEO Joseph Jimenez told investors at the 34th Annual J.P. Morgan Healthcare Conference in San Francisco on Monday.

While Novartis' immuno-oncology portfolio now includes checkpoint inhibitors, chimeric antigen receptor T-cell technology, myeloid cell targeting agents and other approaches, Jimenez admitted that "you could criticize the company for being late to the party for the first round of immuno-oncology. We've spent a lot of time thinking about why that was the case. If you look at our company, our physician scientists must understand the mechanism before they will get excited and behind a significant effort. We acknowledge now that that's not always the best approach."

With the loss of Gleevec (imatinib) squarely on its radar, Jimenez said that Novartis would prioritize a way in which it could deliver performance for investors while still improving its pipeline.

Chief among the company's projects this year will be the execution of a turnaround plan for its eye care unit, Alcon, which he said would be delivered during the company's upcoming quarterly earnings call, and a consolidation of internal business services.