CytomX Therapeutics ( CTMX ) flirted with a record high Wednesday after announcing a deal with No. 1 biotech Amgen ( AMGN ) to develop an immuno-oncology drug that could have fewer toxic side effects.
[ibd-display-video id=2327013 width=50 float=left autostart=true]In midday trading on the stock market today , CytomX rocketed 19.2%, near 22.70, after earlier rising as much as 29.8% to an almost two-year high at 24.67. The previous record was a penny higher in December 2015.
Shares broke out of a cup that began forming in March with a 20.12 entry point. Meanwhile, the broader biotech industry rose a fraction. The group is ranked second out of 197 groups IBD tracks.
Amgen and CytomX will co-develop what the latter calls a probody-based drug. Probody therapeutics are meant to bind selectively to specific targets in tumors, and not to healthy tissue, to minimize toxicity and create safer cancer therapies, according to CytomX.
The drug will target the epidermal growth factor receptor protein, or EGFR, to help immune system cells identify and destroy cancer cells. Using CytomX’s probody technology will help ensure that the immune system only target EGFR proteins in tumor cells, not in healthy tissue.
IBD’S TAKE: Amgen has an IBD Composite Rating of 93 out of a best-possible 99, meaning it trades better than nine in 10 stocks in terms of key growth metrics. Still, it’s just 12th in IBD’s 452-company Biotech industry group. Head to IBD Stock Checkup for a look at other biotech leaders.
EGFR-targeting drugs are already on the market, Instinet analyst Christopher Marai said in a note to clients. Eli Lilly ‘s[ticker symb=LLY ] Erbitux is approved to treat cancers of the head and neck, as well as the colon. But it is associated with severe toxicities, Marai said.
He boosted his price target on CytomX stock to 44 from 32 and kept his buy rating. He noted that other data from Roche support the development of these drugs in solid tumors, rather than just blood cancers. CytomX’s platform “may reduce immune-related side effects and (gastrointestinal) toxicity,” he said.
Amgen will pay CytomX $40 million upfront and purchase $20 million of CytomX common stock. CytomX will be eligible to receive up to $455 million in milestone payments. Amgen will lead global commercial activities. CytomX will be able to opt into profit-sharing in the U.S. and receive tiered, double-digit royalties on net product sales outside the U.S.
Under the terms of the deal, Amgen will also receive exclusive worldwide rights to develop and commercialize up to three additional, undisclosed targets. Should Amgen pursue all three, CytomX will be eligible to receive up to $950 million in additional payments and high-single-digit to mid-double-digit royalties.
CytomX will also receive the rights from Amgen to an undisclosed preclinical drug. Amgen is eligible to receive milestones and royalties resulting from any products developed and commercialized out of this program.
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