Jounce Therapeutics, Inc. (JNCE) surged 55.58% last day. The drug maker entered into an exclusive agreement with Gilead Sciences, Inc. for a drug development program.

JTX-1811 is a drug being developed by Jounce for depletion of certain T cells which restrain immune system to respond tumor formation in the human body. Jounce is expecting starting clinical trials of the drug in first half of next year by filing an Investigational New Drug (IND) application.

William A. Lee, PhD, Executive Vice President of Research at Gilead Sciences welcomed the prospective addition of JTX-1811 to company’s investigational immuno-oncology therapies plans. Those plans will possibly be transforming the way to take care of the cancer patients. JTX-1811 matches with our other oncology drugs being developed. It could also be first in its class of curing tumors as well as hematological disorders, Lee said.

At successful closing of the deal, Jounce will get cash payment of $85 million from Gilead. An investment of $35 million in equity by Gilead in Jounce at a discounted rate is also agreed upon term of the agreement. Moreover, Jounce might receive an additional sum of $685 million in future. Those will be upon achieving different targets related to clinical development, regulatory processes and commercial production of the drug so developed. As part of the agreement, Jounce will also get paid for royalties. Ratio of those royalties could be in between 8% and 15% depending upon the global sales of the drug.

Jounce will remain leading the process of developing JTX-1811 including its IND clearance. Once cleared, the drug will be produced by Gilead as sole manufacturer. Currently there is not approved in part of the world. Efficiency and safety of the drug is yet to be evaluated.

The transaction is likely to be closed till end of this year, but is subject to usual closing processes and prevailing antitrust clearance. That includes Hart-Scott Rodino Antitrust Improvements Act as well.

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