This biotech nearly doubled in a huge deal with Novartis

Monte Rosa Therapeutics (glue) bound high on Monday, a deal with shares nearly doubling Novartis (NVS) to develop treatments for immune system conditions.

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The former is working on what it calls a “molecular adhesive degrader.” These drugs aim to selectively degrade and eliminate hard-to-target proteins at the heart of certain diseases.

Novartis has signed a worldwide exclusive license agreement for Monte Rosa's MRT-6160. It is currently undergoing early-stage testing in healthy volunteers as a potential treatment for autoimmune diseases.

Monte Rosa has previously suggested the drug could treat ulcerative colitis, rheumatoid arthritis and other diseases, Wedbush analyst Robert Driscoll said in a report. MRT-6160 reduces a protein called VAV1.

“Overall, we see this favorable collaboration agreement as additional strong validation of the Monte Rosa (platform) as well as recognition of significant potential opportunities around targeting VAV1 with a first-in-class degrader,” he said.

Shares of Monte Rosa Therapeutics rocketed 93.9% to 9.48.

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Under the terms of the deal, Monte Rosa will receive $150 million up front. Novartis will pay the biotech company up to $2.1 billion in milestone payments. Monte Rosa will also receive tiered royalties on sales outside the United States

Driscoll reiterated his outperform rating on Monte Rosa stock and raised his price target to 15 from 11.

“We see a potentially accelerated timeline for the overall MRT-6160 development program and a significant expansion of Monte Rosa Therapeutics' operational cash runway, which we expect will allow for deeper pipeline advancements,” he said.

He expects Monte Rosa to receive preliminary test results in the upcoming first quarter.

Shares in Monte Rosa hit their highest level since July 2022. They have ranged above their 50-day and 200-day moving averages, MarketSurge shows.

Follow Alison Gatlin on X at @IBD_AGatlin, formerly known as Twitter.

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