Pharmaceutical corporation Eli Lilly and Company (LLY) recently announced that it has entered into a multi-year research collaboration and licensing agreement with clinical-stage healthcare company Regor Therapeutics to discover, develop, and commercialize novel therapies for metabolic disorders.
Following the news, shares of the company gained 0.51% to close at $244.14 on Friday.
Terms of the Agreement
Under the terms of the agreement, Regor will receive an upfront payment of up to $50 million, which includes an equity investment by Lilly.
Additionally, Regor is entitled to receive up to $1.5 billion in potential payments based on the achievement of certain milestones, along with tiered royalties from low-single to low-double digits on sales resulting from the agreement.
Strategic Impact
With this collaboration, Lilly will gain the license to access specific Regor intellectual property with an option to extend the license.
Further, access to each other’s technology is expected to be beneficial for both companies, and in turn, serve customers more efficiently.
Notably, this agreement will not be valid for the People’s Republic of China, Macau, Hong Kong, and Taiwan.
Management Commentary
Vice President, Diabetes Research and Clinical Investigation at Lilly, Ruth Gimeno, Ph.D. said, “Through this collaboration, we will have the opportunity to expand treatment options available to patients suffering from metabolic disorders. Regor’s technology will also allow Lilly to further accelerate innovation and deliver breakthrough therapies in obesity and diabetes.”
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Price Target
Recently, BMO Capital analyst Evan Seigerman reiterated a Buy rating on the stock with a price target of $311, which implies upside potential of 27.4% from current levels.
Consensus among analysts is a Strong Buy based on 7 Buys and 2 Holds. The average Lilly price target of $280.22 implies upside potential of 14.8% from current levels.
Smart Score
Lilly scores a 9 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations. Shares have gained about 54.6% over the past year.
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