Market Overview

Cerulean Stock Shoots Higher On News Of Novartis Collaboration

Cerulean Stock Shoots Higher On News Of Novartis Collaboration
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Shares of Cerulean Pharma Inc (NASDAQ: CERU) are up over 50 percent on roughly 19 times its average volumes on Wednesday.

News Behind Move

The clinical-stage company said in a Businesswire release that it has struck a strategic collaboration agreement with Swiss drug giant Novartis AG (ADR) (NYSE: NVS) to develop nanoparticle-drug conjugates.

Terms Of Deal

  • Cerulean is to develop NDC product candidates combining its proprietary Dynamic Tumor Targeting technology with Novartis' proprietary compounds directed at up to five targets.
  • Cerulean creates NDC candidates; Novartis develops and commercializes.

Related Link: Juno Therapeutics Viewed As A Sympathy Play On Kite Pharma's KTE-C19

Financial Terms

  • Cerulean said in the release that it will receive upfront payment of $5 million, plus, funding for five full-time equivalents.
  • The company also stands to gain pre-clinical, clinical, regulatory and sales milestones for each target.
  • Single-digit to low double-digit tiered royalties on net sales for each NDC product.

Christopher Guiffre, president and CEO of Cerulean, said, "This collaboration is further validation of our powerful technology platform, and we are excited that Novartis is including NDCs in its drug discovery and development efforts. We are pleased to have the opportunity to contribute to Novartis' pipeline, and we believe that partnering with them will help accelerate our efforts to provide safer and more effective options to cancer patients."

Financing Deal With Aspire Capital

Separately, Cerulean also announced a $20 million stock purchase and a registration rights agreement with Aspire Capital Fund in a bid to gain access to capital to support its clinical efforts. Immediately after the inking of the deal, Aspire purchased 800,000 shares of Cerulean's common stock at $1.25 per share, with the company having the right to sell up to the remaining $19 million of its stock over a 24-month period.

At the time of writing, shares of Cerulean Pharm were skyrocketing 49.82 percent at $1.03. However, Novartis was down 0.49 percent at $75.91.

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