By Sam Boughedda
Investing.com — Foghorn Therapeutics Inc (NASDAQ:FHTX) jumped 55% to $18.60 in early Monday trading on news of a strategic collaboration with Eli Lilly and Company (NYSE:LLY) to create novel oncology medicines by applying Foghorn's proprietary Gene Traffic Control platform.
Lilly will pay Foghorn an upfront consideration of $300 million in cash and make an equity investment of $80 million in Foghorn common shares at $20 per share.
There is also a co-development and co-commercialization agreement for Foghorn's BRM oncology program and an additional undisclosed oncology target. The collaboration includes three other discovery programs using Foghorn's Gene Traffic Control platform.
The BRM-selective program and additional undisclosed target program will see Foghorn direct discovery and early research activities, with Lilly heading up the development and commercialization activities. The companies will share 50/50 in the U.S. economics. In addition, Foghorn is eligible to receive royalties on sales outside of the U.S., beginning in the low double-digit range and rising into the twenties based on revenue.
Foghorn could receive up to $1.3 billion in potential development and commercial milestones.
"Oncogenic mutations in BRG1 impact a large population of cancer patients and we believe are best addressed therapeutically with a highly selective BRM inhibitor, though designing such a drug is a difficult chemistry challenge," commented Jacob Van Naarden, CEO of Loxo Oncology at Lilly and president of Lilly Oncology.
In late November, H.C. Wainwright analyst Andrew Fein initiated Foghorn with a buy and $25 price target, telling investors that the company has a robust pipeline of assets.