Arcellx and Gilead Sciences' Kite division deepened their collaboration in cancer treatments on Wednesday. The news sent ACLX stock rocketing into a breakout.
The companies announced their original collaboration last December and began working together on a multiple myeloma drug. Now, they've expanded that collaboration to include lymphomas. Further, Kite exercised its option to negotiate a license for another potential multiple myeloma drug.
"Since entering into this strategic collaboration with Kite almost one year ago, we are thrilled with how the partnership is rapidly progressing and the alignment across our teams," Arcellx Chief Executive Rami Elghandour said in a written statement.
On today's stock market, ACLX stock surged 5.3% to 49.99. Shares broke out of a cup-with-handle base, topping a buy point at 48.38, according to MarketSmith.com.
ACLX Stock: Hunting Down Cancer
Both companies are working on cancer treatments called CAR-T therapies. These treatments require extracting a patient's immune cells and teaching them to spot camouflaged cancer cells. The patient's own cells are then reinfused to hunt down and destroy the cancer cells.
Under the terms of the expanded collaboration, Arcellx will receive an upfront cash payment of $85 million and a $200 million equity investment in ACLX stock. Gilead expects the transaction to reduce its earnings by 9 cents to 11 cents per share, if it closes by year end.
Elghandour, Arcellx's CEO, notes the cash payment will help extend the company's runway into 2027 as the company plans to commercialize its first Kite-partnered multiple myeloma treatment, CART-ddBCMA. Arcellx expects to share first-phase results from a study of that drug next month.
Leerink Partners analyst Daina Graybosch says the deal is promising for Arcellx's approach to multiple myeloma.
"Overall, in our view this investment acts as a rubber stamp from the industry leader in cell therapy on both Arcellx's near- and long-term aspirations," she said in a report. "The exercise price on the equity portion of the investment represents a 30% premium over Arcellx's closing price on Nov. 14."
Graybosch kept her outperform rating on ACLX stock.
Arcellx stock has a nearly perfect Relative Strength Rating of 98. This means skares ranks in the top 2% of all stocks when it comes to 12-month performance, according to IBD Digital.
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