Precision BioScience (NASDAQ:DTIL) stock is rallying for a second straight day after the company announced a new partnership with Novartis (NYSE:NVS) after market close yesterday. Novartis is a leading, multinational drug maker. After climbing 10% yesterday, shares are jumping 7% this morning.
Under the deal, Precision, a gene-editing company, will create a nuclease that is supposed to be inserted into the gene of a living organism. The nuclease may become “a potential one-time transformative treatment option for diseases including certain hemoglobinopathies such as sickle cell disease and beta thalassemia,” Precision explained.
Precision has agreed to create the nuclease and test it in labs. Meanwhile, Novartis will handle “all subsequent research, development, manufacturing and commercialization activities.”
DTIL Stock Gets Boost From Novartis Deal
Precision stated that it will “receive an upfront payment of $75 million and is eligible to receive up to an aggregate amount of approximately $1.4 billion in additional payments for future milestones.” Further, Precision may also obtain “certain research funding” from Novartis and “tiered royalties ranging from the mid-single digits to low-double digits on product sales.”
Commenting on the deal, President of the Novartis Institutes for Biomedical Research Jay Bradner said:
“We identify here a collaborative opportunity to imagine a unique therapeutic option for patients with hemoglobinopathies, such as sickle cell disease and beta thalassemia – a potential one-time treatment administered directly to the patient that would overcome many of the hurdles present today with other therapeutic technologies.”
According to Precision, the deal will provide the company with enough money to stay afloat until Q2 2024.
Additionally, Precision announced a common stock offering yesterday. The company will “sell 35,971,224 shares of its common stock at a price of $1.39 per share.” Precision expects to generate gross proceeds of about $50 million from the sale of its stock.
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On the date of publication, Larry Ramer did not hold (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.