Formycon shares jumped after the German drugmaker and Indian partner Zydus Lifesciences said the U.S. Food and Drug Administration accepted for review their application for a biosimilar version of Merck's blockbuster cancer medicine Keytruda.

Shares in Formycon were up 13% in European early afternoon trading, reducing their year-to-date loss to about 14%.

Formycon and Zydus said an FDA decision on their product, called for now FYB206, could come in the third quarter of 2027.

The drug, a biosimilar--or copycat version--of Keytruda, was developed by Formycon and licensed to Zydus, which holds exclusive commercialization rights for the U.S. and Canada. The FDA filing acceptance triggers the payment of an undisclosed sum from Zydus to Formycon as part of their licensing agreement, they said.

"To the best of the companies' knowledge, this is the first publicly announced acceptance by the FDA of an application for a Keytruda biosimilar," they said.

There are a number of Keytruda biosimilars under development, but the first to hit the market is likely to benefit from attractive economics before material price competition sets in, analysts at RBC Capital Markets wrote in a note to clients.