Swedish biotech Karo Bio's ($KARO) shares spiked after the company revealed a new research and development deal focused on autoimmune diseases with U.S. drug giant Pfizer ($PFE). Karo, which has been planning cutbacks and a spin-off, could reap as much as $217 million in upfront and milestone fees, in addition to royalties, from Pfizer, the company announced Dec. 24.
Karo's shares surged 80% after the announcement, the biggest jump since the stock hit the public market in 1998, Bloomberg reported. The upbeat news came amid upheaval at the Huddinge, Sweden-based company, which announced 25 staff cuts Nov. 1, about a week after revealing plans to spin off its preclinical business and reduce expenses.
The Pfizer deal centers on Karo's small molecule RORgamma (RORgt) modulators against autoimmune diseases such as multiple sclerosis, rheumatoid arthritis and psoriasis, according to Karo's release. Pfizer will provide all of the funding for the collaboration and get exclusive worldwide market rights to drugs developed under the agreement. Karo said it's already discovered drugs targeting the nuclear hormone receptor RORgamma, which triggers the production of an inflammation-causing protein called IL-17. The protein is the progeny of T helper 17 cells, or Th17s, which are key players in numerous immune-related diseases.
"The central role of RORgt in Th17 cell differentiation coupled with the increasing clinical validation for the importance of IL-17 and other Th17-derived cytokines in autoimmune diseases, makes RORgt a compelling target," Jose-Carlos Gutierrez-Ramos, Pfizer's senior vice president, biotherapeutics, worldwide R&D, said in a statement. "Combining KaroBio's deep expertise in nuclear hormone receptors with the world-class chemistry and cytokine immunology expertise of Pfizer has the potential to accelerate our drug discovery effort in this competitive area."
A bevy of drug companies are now involved in research of drugs targeting Th17-related pathways. The big ones include GlaxoSmithKline ($GSK), Biogen Idec ($BIIB) and Merck ($MRK), and startups including GSK-backed Tempero Pharmaceuticals and Merck partner Lycera have been active as well.
- here's the release
- see Bloomberg's article