Shares of LianBio (NASDAQ:LIAN) — which focuses on “developing and commercializing medicines for cardiovascular, oncology, opthalmology, and inflammatory diseases in China and other Asian countries” — are soaring on Tuesday. Earlier this morning, the company announced a key agreement with Bristol-Myers Squibb (NYSE:BMY) regarding exclusive rights to a cardiovascular therapeutic. Subsequently, LIAN stock is up more than 130% as of this writing.
According to the accompanying press release, Bristol-Myers obtained exclusive rights from LianBio to develop and commercialize its mavacamten therapeutic in mainland China, Hong Kong, Taiwan, Macau, Thailand and Singapore. This move follows a prior (and now terminated) exclusive licensing agreement LianBio previously entered into with MyoKardia, which is now a wholly owned subsidiary of Bristol-Myers Squibb.
As part of the agreement, LianBio will receive a one-time payment of $350 million. Furthermore, the biotech company will be released from payment obligations of up to $127.5 million in remaining milestone payments, which fell under the prior MyoKardia agreement.
According to information published by the National Library of Medicine, mavacamten “is a novel, first-in-class molecule used to manage and treat patients with obstructive hypertrophic cardiomyopathy (HCM).”
LIAN Stock Enjoys a Robust Credibility Spike
Earlier this year, LIAN stock enjoyed a significant rise in its share price. Subsequently, choppy price action saw it move to below parity for the year prior to the recent announcement. Now, on a year-to-date (YTD) basis, LIAN is up more than 100%, demonstrating that patience can sometimes yield big returns in the biotech space.
On a fundamental note, Bristol-Myers acquiring the mavacamten therapeutic also lends some exceptional credibility to LianBio. CEO Yizhe Wang, Ph.D. said that in the past three years, the biotech has worked closely with Bristol-Myers to bring the drug to patients in Asia.
Wang further stated:
“The LianBio team executed a successful clinical development and regulatory strategy in our territories and has built robust launch infrastructure in anticipation of mavacamten’s potential approval in China next year. As the global owner, BMS is ideally positioned to continue to build on the value we created for mavacamten in China and to optimize patient access to this important new medicine across these territories.”
Per the press release, the China National Medical Products Administration (NMPA) has granted “priority review” to mavacamten’s new drug application (NDA) for treating adults with obstructive HCM. Earlier this year, LianBio also received approval in Macau and Singapore for mavacamten for treating adults with symptomatic obstructive HCM.
Why It Matters
Within the past three months, only one analyst — Bank of America’s Geoff Meacham — has covered LIAN stock on TipRanks, pegging it as a “buy” with a $6 price target. This estimate still implies about 85% upside potential. Earlier in the trailing-year period, two other analysts have also covered LIAN with “buy” ratings.
On the date of publication, Josh Enomoto 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.
