Why Is Cancer-Focused C4 Therapeutics Stock Soaring Today?

C4 Therapeutics Inc CCCC has entered into an exclusive license and collaboration agreement with Merck & Co Inc MRK to develop degrader-antibody conjugates (DACs), an emerging modality designed to selectively target and neutralize disease-causing proteins in cancer cells.

Under the terms of the agreement, C4 Therapeutics will receive a $10 million upfront payment. 

C4 Therapeutics and Merck will collaborate to develop DACs directed to an initial undisclosed oncology target exclusive to the collaboration. 

For DACs directed to this initial target, C4 Therapeutics is eligible to receive milestone payments totaling approximately $600 million, as well as tiered royalties on future sales. 

The agreement also provides Merck with the option to extend the collaboration to include three additional targets that would be exclusive to the collaboration, which could yield option exercise payments as well as potential milestones and royalties. 

If Merck exercises all of its options to extend the collaboration, C4 Therapeutics would be eligible to receive up to approximately $2.5 billion in potential payments across the entire collaboration.

As part of the collaboration, C4 Therapeutics will be responsible for using its proprietary TORPEDO platform to develop degrader payloads in the discovery phase. 

Merck will be responsible for antibody conjugation to create DACs in the discovery phase and advancing these DAC candidates through preclinical and clinical development and commercialization.

Price Action: CCCC shares are up 55.1% at $1.82, and MRK stock is down 0.13% at $104.23 during the premarket session on the last check Tuesday.