What happened

Shares of Affimed (NASDAQ:AFMD) fell nearly 20% today after -- well, no news, really. But a few days ago, the company soared 246% after announcing that Genentech, owned by Roche, decided to take the small German company's untested technology platform for a spin. The previously under-the-radar biopharma also got a cool $96 million up-front payment and could see up to $5 billion in milestone and royalty payments if everything goes smoothly. 

In other words, shares are simply cooling off after vaulting from a market cap of under $100 million to over $320 million. As of 3:13 p.m. EDT on Thursday, the stock had settled to a 16.6% loss.

A stock chart with a sudden dip drawn on a chalkboard.

Image source: Getty Images.

So what

Roche paid a sizable up-front payment to license Affimed's redirected optimized cell killing (ROCK) platform for oncology applications. While relatively unproven, it has plenty of potential on paper. The technology plans to engineer two types of immune cells, natural killer cells and T cells, to boost the efficiency and effectiveness of novel immunotherapies.

While the first-generation batch of these novel therapies can be powerful when they work, the first few products have only worked in 10% to 30% of patients. Affimed thinks it can greatly increase that, and Roche is certainly willing to find out.

Now what

Investors can surely expect Affimed stock to be volatile in the near future as Mr. Market figures out how to value the company. It doesn't seem likely to slip back below a $100 million valuation, but there could be some wiggle room between $200 million and $300 million. Then again, with a $96 million payment on the way and an absolutely staggering milestone and royalty bounty on the horizon, the biopharma may find an even higher valuation before the end of the year. Buckle up, for better or for worse.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.