Aduro Stock Surges On STING Activator Deal With Eli Lilly

AduroBioTech, Inc. (NASDAQ:ADRO) announced that it has entered into an exclusive collaboration and license agreement with pharma giant Eli Lilly (NYSE:LLY) to develop novel immunotherapies for autoimmune and other inflammatory diseases by leveraging its cGAS-STING inhibitor platform.

Shares of Aduro shot up almost 30% in after-hours trading on Tuesday following this news. However, the stock has plummeted 67.1% so far this year, significantly wider than the industry’s decline of 22.1%.

Aduro's cGAS-STING pathway inhibitor program is designed to develop novel immunotherapies and regulate the immune response associated with various autoimmune diseases. Following this deal, Lilly will gain an access to the Aduro’s novel molecules that are designed to inhibit the cGAS-STING pathway and both companies will advance the same into clinical development stage for inventing new immunotherapies to address autoimmune and other inflammatory diseases.

Per the terms of the contract, Aduro is eligible to receive an upfront payment of $12 million, development and commercial milestones up to $620 million and single-to-low-double-digit royalties on net sales, if Lilly is able to successfully commercialize a therapy from the alliance.

Aduro will also receive research funding and have an option to co-fund the development of each product in exchange of higher royalties. Lilly will bear the expenses of commercialization, provided any product is developed under the deal.

We believe, the agreement not only validates Aduro’s STING pathway activator platform but also solidifies the company’s financial position with the upfront payment of $12 million and additionally, providing it with the much-needed resources as license fees as well as upfront and milestone plus other payments in absence of any approved product.

Notably, Aduro has been pursuing acquisitions and agreements to help sponsor its pipeline development.

Aduro has a collaboration and license agreement with Novartis (NYSE:NVS) for developing and commercializing STING activator candidates in its oncology pipeline. Moreover, the company has granted Janssen Biotech, a subsidiary of Johnson & Johnson (NYSE:JNJ) , an exclusive, worldwide license to develop its cancer candidates, namely ADU-214 and ADU-741.

Zacks Rank & Stocks to Consider

Aduro currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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