Merck Deal Lifts Geron

Geron will receive an upfront payment, milestone payments and royalties.
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Geron

(GERN) - Get Report

soared Monday after the company said it signed a licensing agreement with drug giant

Merck

(MRK) - Get Report

in which the two sides will collaborate on a cancer vaccine.

According to the agreement, Merck will pay Geron to help develop a vaccine targeting telomerase using Merck's vaccine technologies. Geron, with a market cap of $583 million, will receive an upfront payment, milestone payments and royalties. Merck also agreed to acquire an equity stake in Geron at a future date. Additional financial terms weren't disclosed.

"This alliance reflects Merck's recognition of telomerase as an important cancer target and Geron's recognition of the strength of Merck's vaccine platform," said Dr. Thomas Okarma, Geron's president and CEO, in a press release. "Our decision to collaborate with Merck was an easy one to make."

In addition, Merck has acquired an exclusive option to negotiate a separate agreement for Geron's dendritic cell-based telomerase vaccine that's in early clinical trials.

Geron shares were higher by $2.40, or 28%, to $11. Merck shares fell 9 cents to $31.82.