Can-Fite BioPharma (CANF) - Get Can-Fite BioPharma Ltd. Sponsored ADR Report  jumped Tuesday after the company and Univo Pharmaceuticals agreed to develop formulations of cannabis components to treat cancer and inflammatory, autoimmune and metabolic diseases.

Shares of Can-Fite were trading up 19% at $2.90.

The companies said in a statement that the collaboration aimed to develop cannabis-based therapeutics.

And Can-Fite will develop a screening assay to identify therapeutically active cannabis components. Univo then would market the assay on a fee-for-service basis to pharmaceutical companies worldwide.

Under the agreement, Univo, a medical-cannabis company, will provide Can-Fite with cannabis and cannabis components plus access to labs for research and manufacturing.

TheStreet Recommends

Can-Fite in turn will pay Univo $500,000 in two installments plus 19.9 million shares, equaling 16.6% of Can-Fite after the shares are issued.

Based on Can-Fite's closing price of $2.39 on Monday, the shares are valued at $47.6 million.

Revenue derived from the collaboration will generally be shared between the companies based on each one's contribution, the companies said in the statement.

Golan Bitton, Univo's chief executive, will join Can-Fite's board in connection with the deal.

Both companies are based in Israel, Can-Fite in Petach Tikvah and Univo in Ashkelon. Both stocks trade on the Tel Aviv Stock Exchange.