Shares of Foghorn Therapeutics (NASDAQ:FHTX) are surging higher today by more than 40% after the biopharmaceutical company announced an exciting partnership with Eli Lilly (NYSE:LLY). The partnership will see Foghorn receive upfront consideration of $300 million in cash. Additionally, there will be an equity investment worth $80 million from Eli Lilly. The equity investment will go into shares of FHTX stock at a price of $20. Indeed, this price represents an upside of 19% from current prices.
Today, Foghorn CEO Adrian Gottschalk commented on the deal:
“We are excited to be collaborating with the Loxo Oncology at Lilly team to use our platform and utilize Foghorn’s powerful precision biology-first approach to create medicines targeting genetic dependencies within the chromatin regulatory system. This collaboration enables an acceleration and expansion of our pipeline and significantly strengthens our balance sheet as we strive to bring new medicines to patients and their families.”
So, what else is there to know about this compelling new partnership? Let’s dive right in.
FHTX Stock: What to Know About the New Partnership With Eli Lilly
- Loxo Oncology, which is the research and development arm of Eli Lilly, will collaborate with Foghorn to create novel oncology medicines using Foghorn’s proprietary Gene Traffic Control platform.
- The collaboration will bring on Eli Lilly as a co-development and co-commercialization partner for Foghorn’s selective Biologic Response Modifiers (BRM) oncology program and also another undisclosed oncology target.
- Additionally, the partnership will include three more discovery programs using Foghorn’s Gene Traffic Control platform.
- For the BRM and undisclosed oncology program, Foghorn will lead discovery and early research activities. Eli Lilly, on the other hand, will lead development and commercialization activities. Both parties will contribute toward operational activities and earn 50/50 in terms of potential U.S. developments. Moreover, Foghorn is eligible to receive royalties on U.S. sales based on potential revenue levels.
- For the discovery programs, Foghorn will lead the discovery and early research activities. Foghorn will have the option to receive a percentage of potential U.S. and foreign sales that can be exercised upon successful completion of the dose-finding toxicity studies. However, Foghorn’s profit is capped at $1.3 billion for potential development and commercialization milestones.
- There will no changes to Eli Lillys’ 2021 non-GAAP earnings per share guidance as a result of this partnership.
- Furthermore, Loxo Oncology CEO Jacob Van Naarden commented: “Foghorn has a differentiated platform and we look forward to the prospect of leveraging it to discover multiple new drugs against similarly challenging targets with strong biologic rationale.”
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
