Why Shares of Translate Bio Are Surging Higher

Shares of the small-cap mRNA therapeutics company Translate Bio Inc TBIO were ripping higher Tuesday.

What Happened: Translate Bio and Sanofi SA SNY announced an expansion to their 2018 collaboration and licensing agreement to develop mRNA vaccines for infectious diseases.

The expanded collaboration will draw upon Translate Bio's more than a decade of experience in mRNA R&D and Sanofi's leadership in vaccine R&D, the companies said.

The Financials: The agreement provides for Translate Bio receiving a total upfront payment of $425 million, and potential future milestones and other payments up to $1.9 billion as well as tiered royalty payments based upon worldwide sales. Sanofi will receive exclusive worldwide rights for infectious disease vaccines.

The upfront payment includes $300 million in cash and a private placement of $125 million in stock at $25.59 per share.

Of the potential milestones and other payments, about $360 million are anticipated over the next several years, inclusive of COVID-19 vaccine development milestones.

"The expansion of our collaboration with Sanofi Pasteur validates the progress we've made in the development of mRNA vaccines for infectious diseases since our work together began in 2018 and also speaks to the potential of our mRNA platform," Translate Bio CEO Ronald Renaud said in a statement. 

The Timeline: The companies — which are evaluating multiple COVID-19 vaccine candidates in animal studies for immunogenicity and neutralizing antibodies in a bid to select a lead candidate — plan to initiate a human study in the fourth quarter of 2020.

The companies are also advancing an mRNA vaccine candidate against influenza through preclinical studies, with initiation of clinical study anticipated in mid2021.

TBIO Price Action: At last check, Translate Bio shares were jumping 43% to $23.22.

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