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Foghorn Therapeutics shares soar 26% premarket on news of cancer collaboration with Eli Lilly

Eli Lilly & Co. LLY, +0.51% said Monday it has entered a strategic collaboration with Foghorn Therapeutics Inc. FHTX, +4.26% for novel oncology targets using Foghorn’s proprietary gene traffic control platform, a move that sent Foghorn’s shares up 26% in premarket trading. As part of the deal, Eli Lilly will pay $300 million upfront and make an equity investment in Foghorn of $80 million, priced at $20 a share. Foghorn shares closed Friday at $11.99. “Oncogenic mutations in BRG1 impact a large population of cancer patients and we believe are best addressed therapeutically with a highly selective BRM inhibitor, though designing such a drug is a difficult chemistry challenge,” said Jacob Van Naarden, CEO of Lilly’s Loxo Oncology unit, which is leading the deal. The companies will share 50/50 in the U.S., and Foghorn will be eligible to receive royalties on sales outside of the U.S. starting in a low double-digit range that will rise to the twenties, based on revenue levels. Foghorn will be able to earn up to a total of $1.3 billion, based on certain commercial and development milestones. Foghorn shares have fallen 41% in the year to date, while the S&P 500 SPX, +0.95% has gained 25%.

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