Roth Capital repeated a Buy rating on Arix Bioscience PLC’s (LON:ARIX) portfolio company Harpoon Therapeutics (NASDAQ:HARP) after it granted phama giant Abbvie (NYSE:ABBV) an exclusive option over the rights to a treatment for a type of blood cancer.
The drug, HPN217, uses Harpoon’s Tri-specific T cell Activating Construct (TriTAC) technology to target BCMA, a biomarker associated with multiple myeloma cancer.
This latest agreement builds on a collaboration deal signed in 2017 and also gives Abbvie exclusive rights to develop and market two new TriTAC molecules plus an option to select up to four additional targets.
For each of the targets, Harpoon will receive a milestone payment of $310 million each upfront plus royalties on global sales.
Harpoon will receive $50 million upfront for the option over HPN217 and a further $50 million when the first patient is treated in a clinical trial, though the licence and option agreement represents a potential transaction value of up to $510 million including royalties.
“We believe that this is a strong indication of Abbvie's confidence in the platform, a superb strategic move for Harpoon to remain focused on its solid tumor efforts, and an excellent source of additional cash (up to $100M likely to be received between now and 1H2020),” wrote analyst Zegbeh Jallah.
The analyst also noted that with regards to the commercial milestone payments of $310 million each, “we've seen several of these agreements in the bispecific space and believe that this is a competitive offer for Harpoon, and we also remind investors that for the discovery agreement, following the discovery phase, AbbVie is solely responsible for the development, manufacturing and commercialization of productions that arise from the agreement.”
Roth maintains a $25 price target on Harpoon shares, which recently traded up slightly to $15.40 in New York.
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