Avidity Biosciences (NASDAQ:RNA) stock is soaring in early trading after the company disclosed that it had expanded its partnership with a huge drugmaker, Bristol Myers Squibb (NYSE:BMY).
More About the RNA-BMY Deal
Avidity and Bristol-Myers will increase the number of Antibody Oligonucleotide Conjugates (AOCs) on which they will collaborate in an effort to develop new cardiovascular treatments.
Avidity’s AOCs are supposed to affect RNA using monoclonal antibodies and oligonucleotide therapies. According to the company, monoclonal antibodies provide its drugs with “specificity,” while oligonucleotide therapies give them “precision.”
BMY will immediately pay Avidity $60 million of cash and buy about $40 million of “RNA stock at a purchase price of $7.88 per share,” Avidity reported. Moreover, the total payments to Avidity by BMY can reach $2.3 billion if RNA meets all the milestones specified in the deal.
Also noteworthy is that “Bristol Myers Squibb will fund all future clinical development, regulatory and commercialization activities coming from this collaboration,” RNA reported.
Additional Information About Avidity
Avidity had launched a previous partnership with BMY in 2021. Under that deal, the companies evaluated the plausibility of using AOCs to treat heart disease. Clearly, BMY was impressed with the information it obtained during the latter collaboration, leading it to announce the expansive deal today.
Avidity currently has three of its own AOC-based drugs in Phase 1/2 trials. These drugs are supposed to improve the prognosis of patients with three rare diseases: myotonic dystrophy type 1, facioscapulohumeral muscular dystrophy, and two types of Duchenne muscular dystrophy.
RNA Stock: What Investors Should Watch
Owners of RNA stock and those interested in buying the shares should monitor the extent to which the collaboration between RNA and BMY produces treatments that are likely to result in additional payments by BMY to RNA. They should also try to determine if the Food and Drug Administration (FDA) will approve these drugs down the road.
Generally, drugmakers are granted milestone payments and FDA approvals because of positive data generated by drugs in clinical trials.
On the date of publication, Larry Ramer 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.
