Monte Rosa Therapeutics bounded higher on Monday, as shares nearly doubled on a deal with Novartis to develop treatments for immune system conditions.
The former is working on what it calls "molecular glue degraders." These drugs aim to selectively degrade and eliminate hard-to-target proteins at the center of some diseases.
Novartis inked a global exclusive license agreement for Monte Rosa's MRT-6160. It's currently in early-stage testing in healthy volunteers as a potential treatment for autoimmune diseases.
Monte Rosa has previously suggested this drug could treat ulcerative colitis, rheumatoid arthritis and other diseases, Wedbush analyst Robert Driscoll said in a report. MRT-6160 degrades a protein called VAV1.
"Overall, we see this favorable collaboration agreement as additional robust validation of Monte Rosa's (platform) as well as acknowledgement of the significant potential opportunities around targeting VAV1 with a first-in-class degrader," he said.
Monte Rosa Therapeutics shares rocketed 93.9% to 9.48.
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Under the terms of the deal, Monte Rosa will receive $150 million upfront. Novartis will also pay the biotech company up to $2.1 billion in milestone payments. Monte Rosa will also receive tiered royalties on sales outside the U.S.
Driscoll reiterated his outperform rating on Monte Rosa stock and hiked his price target to 15 from 11.
"We note the likely accelerated timelines for MRT-6160 development program overall, and significant extension of Monte Rosa Therapeutics' operational cash runway, which we expect to allow advancement of its deep pipeline," he said.
He expects Monte Rosa to have the results of early-stage testing in the upcoming first quarter.
Shares of Monte Rosa surged to their highest point since July 2022. They also bounded above their 50-day and 200-day moving averages in massive volume, MarketSurge shows.
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