Why This Gilead Deal Is Huge For Jounce Therapeutics

Jounce Therapeutics Inc. (NASDAQ: JNCE) made a massive gain on Tuesday after the company announced a licensing agreement with Gilead Sciences Inc. (NASDAQ: GILD). This deal is for the discovery and development of novel cancer immunotherapies and predictive biomarkers.

In terms of the specifics, Gilead is exclusively licensing Jounce’s JTX-1911 program. For some quick background, JTX-1811 is a monoclonal antibody designed to selectively deplete immunosuppressive tumor-infiltrating T regulatory (TITR) cells.

Under the terms of the agreement, Gilead will make an upfront payment of $85 million and a $35 million equity investment at a premium. Additionally, Jounce may receive up to an additional $685 million in future clinical, regulatory and commercial milestone payments. Jounce will also be eligible to receive royalties ranging from high single digit to mid-teens based upon worldwide sales.

Accordingly, Jounce will lead development of JTX-1811 through Investigational New Drug (IND) clearance. Afterwards, Gilead will have the sole right to develop JTX-1811. Currently, JTX-1811 is not approved anywhere globally and its efficacy and safety have yet to be established.

Looking forward, this antibody remains on track for filing an IND application in the first half of 2021.

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Excluding Tuesday’s move, Jounce stock has underperformed the broad markets with its stock down about 45% year to date. In the past 52 weeks, the stock is up closer to 28%.

Jounce Therapeutics’ stock was last seen up about 53% at $7.40, with a 52-week range of $2.79 to $10.00. The consensus analyst price target is $10.63.

Gilead stock was last seen down about 1% at $65.85, with a 52-week range of $60.89 to $85.97. The consensus analyst price target is $77.75.

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