Why AC Immune Stock Zoomed Almost 15% Higher Today
Key Points
This will help fund the biotech's development of a unique treatment for neurodegenerative diseases like Alzheimer's.
The company could earn more than $2.1 billion if this work is successful.
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AC Immune (NASDAQ: ACIU) isn't a familiar name to many investors, but that might be changing. The Switzerland-based biotech saw its stock zoom nearly 15% skyward on Tuesday, following news of a favorably revised collaboration agreement with a pharmaceutical sector titan within our borders.
Fruitful partnership
AC Immune, a clinical-stage biotech that develops precision medicine targeting neurodegenerative disorders, is currently in a partnership with Eli Lilly. The two companies have a license and collaboration agreement centered on AC Immune's Morphomer platform, from which it aims to develop next-generation treatments for Alzheimer's disease and other neurodegenerative afflictions.
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The European company announced on Tuesday that the agreement, dating back to 2018, has been amended. Eli Lilly will pay AC Immune 10 million Swiss francs ($12.5 million) as an upfront payment and will be eligible for a subsequent milestone payment upon phase 1 clinical trial dosing.
All told, AC Immune could be paid more than 1.7 billion Swiss francs ($2.1 million) if it meets certain clinical, regulatory, and commercial milestones with a successfully developed drug. It'll also be eligible for royalties from sales of such a product or products.
A biotech to watch
AC Immune also indicated that its development is entering an exciting new stage. It quoted CEO Andrea Pfeifer as saying that "This collaboration exemplifies our work toward precision prevention of neurodegenerative diseases. We expect to initiate Investigational New Drug (IND)-enabling studies imminently."
Although $10 million isn't a huge amount for the massive Eli Lilly, it's quite the pile for a relatively small, clinical-stage biotech like AC Immune. It shows that the pharmaceutical giant believes in its partner's program and is willing to put its money where its mouth is. Investors were right to greet this development very positively.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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