Eli Lilly inked a gene-editing collaboration with Verve Therapeutics on Thursday, offering "pharma validation" for the nascent platform, an analyst said. VERV stock soared on the news.
The pharmaceutical giant is lending its cachet to small biotech Verve. Together, the companies will codevelop Verve's gene-editing treatment that aims to lower lipoprotein A. Elevated lipoprotein A increases the risk of heart disease, stroke, blood clots and narrowed blood vessels.
"We like the deal as it offers pharma validation, extends runway into 2026 and allows Verve to advance lipoprotein A with no near-term (profit and loss) burden," RBC Capital Markets analyst Luca Issi said in a report to clients.
On the stock market today, VERV stock jumped 16% and ended the regular session at 19.84. Lilly stock advanced 1.4% to 453.93.
VERV Stock: Big Pharma Invests In Lipoprotein
Under the terms of the deal, Lilly will pay Verve $60 million upfront. Verve is also eligible for up to $465 million in research, development and commercial milestones, as well as tiered royalties on global sales.
Issi notes that the payment is key as Verve otherwise would have invested in the gene-editing program at risk. Verve doesn't expect to have the results of its cardiovascular-outcomes study until 2025. He sees the terms as in line with other recent deals for lipoprotein A-lowering drugs. The news sent VERV stock to its highest point in a month.
Amgen is teamed up with Arrowhead Pharmaceuticals, and Novartis is working with Ionis Pharmaceuticals, on lipoprotein A-lowering drugs.
Meanwhile, Lilly and Dicerna Pharmaceuticals are working together on a drug that would silence a gene involved in cardio-metabolic diseases, including elevated lipoprotein A.
"We think the deal also signals that pharma is very excited about the target, believes the market is not a zero-sum game and thinks regulators are open-minded about gene-editing, even for indications where other modalities are likely to be available," Issi said.
He has an outperform rating and 35 price target on VERV stock.
Biotech Stock Has Low Ratings, However
Shares of Verve are now well above their 50-day moving average, according to MarketSmith.com.
But VERV stock has a low IBD Relative Strength Rating of 25, putting it in the bottom quarter of all stocks in terms of 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
