Verastem (VSTM) Stock Climbs On SNY License Agreement

Verastem Oncology VSTM Stock News

Verastem Inc (NASDAQ: VSTM) is making a run for the top in the market this morning, trading on gains of more than 9.92%. The gains come after the company announced that it has entered into an exclusive license agreement with Sanofi (NASDAQ: SNY). Here’s what’s going on:

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VSTM Stock Gains On SNY License Agreement

In a press release issued early this morning, Verastem said that it has entered into an exclusive license agreement with Sanofi. Under the terms of the agreement, Sanofi will develop and commercialize the company’s COPIKTRA product in Russia and CIS, Turkey, the Middle East and Africa.

COPIKTRA is an oral inhibitor of phosphoinositide 3-kinase (PI3K). In fact, the treatment is the first approved dual inhibitor of PI3K-delta and PI3K-gamma. Under the license agreement, Sanofi will develop the treatment in the covered regions for various oncology indications.

In exchange for the exclusive license, SNY has agreed to make an upfront payment to VSTM in the amount of $5 million. Moving forward, the company may receive milestone payments in the amount of $42 million on top of double-digit tiered royalties on net sales of COPIKTRA.

As part of the agreement, SNY has the exclusive right to develop and commercialize the treatment. This includes holding the marketing authorization and product license in licensed territories.

In a statement, Dan Peterson, President and CEO at VSTM, had the following to offer:

Sanofi brings world-class capabilities in developing and commercializing products, making them an ideal partner to bring COPIKTRA to patients in these territories. Establishing this third partnership outside the U.S. validates the global potential of COPIKTRA and underscores our commitment to bring COPIKTRA to patients worldwide.

The above statement was followed up by David Khougazian, Head of Sanofi Genzyme, China & Emerging Markets. Here’s what he had to say:

As a specialty care leader, we welcome partnerships that have the potential to bring value for patients and caregivers. This agreement adds to our pipeline an oncology medicine with an innovative mechanism of action and a significant potential of new hope for the patients suffering from those types of blood malignancies with high unmet medical need. Partnering with Verastem Oncology for the development and commercialization of COPIKTRA is consistent with our goals to deliver enhanced patient care and to expand our presence in oncology in Emerging Markets.

A Huge Win

The news that was released today is a huge win for Verastem and its investors. Before we get into why, it’s important that you know that COPIKTRA was approved in September of 2018 in the United States.

The treatment is currently indicated as an option for adult patients with relapsed or refractory chronic lymphocytic leukemia and small lymphocytic lymphoma after at least two prior therapies. The treatment has also been gratned accelerated approval in the US for patients with relapsed or refractory follicular lymphoma after at least two prior systemic therapies and the company continues to develop the treatment for more indications.

With that said COPIKTRA was approved in the United States, one of the hardest markets to enter with new drugs. With an experienced partner like Sanofi and the fact that the drug is approved in the United States, there’s a strong chance that the drug will make it through development and to approval in all license regions, generating strong milestone revenue and eventually sales royalties for VSTM.

Onto that point, as mentioned above, SNY is a very large, experienced company. Once approved, the company’s efforts in commercialization will likely lead to strong sales, making this a great opportunity for a long run positive trend in revenue.

All in all, this deal is a big one for VSTM and its investors!

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