C4 Therapeutics Inc shares surged 93% to $2.28 in early trading on Tuesday after the clinical-stage biopharmaceutical company announced an exclusive license and collaboration agreement with Merck & Co Inc (NYSE:MRK) to develop degrader-antibody conjugates (DACs), an emerging modality designed to selectively target and neutralize disease-causing proteins in cancer cells.
C4T said it will receive a $10 million upfront payment and is eligible to receive milestone payments totaling about $600 million, as well as tiered royalties on future sales.
"We are thrilled to collaborate with Merck to innovate within the growing field of antibody-drug conjugates and evaluate the potential for combining the catalytic efficiency, potency, target specificity, and durability of degraders with the specific binding and delivery capabilities of antibodies," C4 Therapeutics CEO Andrew Hirsch said in a statement.
C4T noted the initial focus will be on one oncology target exclusive to the collaboration, while Merck has the option for three additional targets, which could yield option exercise payments as well as potential milestones and royalties.
If Merck exercises all of its options to extend the collaboration, C4T would be eligible to receive up to about $2.5 billion in potential payments across the entire collaboration, according to the company.
In addition, C4T stated that as part of the collaboration, it will be responsible for using its proprietary TORPEDO platform to develop degrader payloads in the discovery phase, while Merck will be responsible for antibody conjugation to create DACs in the discovery phase and for advancing these DAC candidates through preclinical and clinical development as well as commercialization.