Arvinas (ARVN) - Get Report climbed Thursday after announcing that Pfizer (PFE) - Get Report will pay the biotech company at least $1 billion to develop and commercialize the breast cancer treatment ARV-471.
Shares of the New Haven, Conn., company were up 8.7% to $84.31 on Thursday, while New York-based Pfizer was up slightly to $41.24.
Truist analyst Joon Lee raised his price target on Arvinas to $170 from $150 and kept his buy rating on the shares after the company announced the collaboration with Pfizer.
While he and many investors he'd spoken with assumed that a collaboration with Pfizer would be coming, the deal came "a bit earlier than expected" and positions Arvinas well vs. its competition, Lee said.
Under the agreement, Pfizer will pay Arvinas $650 million upfront. Separately, Pfizer will make a $350 million equity investment in Arvinas.
The companies will equally share worldwide development costs, commercialization expenses and profits.
Arvinas said it's also eligible to receive up to $400 million in approval milestones and up to $1 billion in commercial milestones.
ARV-471, currently in Phase 2 development, is an estrogen receptor protein degrader. The estrogen receptor is a well-known disease driver in most breast cancers, the companies said.
Arvinas and Pfizer are seeking to develop ARV-471 as the potential endocrine therapy of choice for patients and their physician.
In December, Cantor Fitzgerald offered bullish comments on Arvinas after the company reported positive news on ARV-471.
Despite the advanced stage of disease and heavy pretreatment, the data from December showed that ARV-471 can promote substantial ER degradation and exhibits an encouraging clinical efficacy and tolerability profile.
“We share Pfizer’s deep commitment to people with breast cancer and are thrilled to partner with them to develop this potentially best-in-class therapy," Arvinas CEO John Houston said in a statement.
The two companies had previously announced in 2018 a separate research collaboration and license agreement for the discovery and development of drug candidates using Arvinas’ PROTAC technology.