GlaxoSmithKline (NYSE:GSK) and Vir Biotechnology (NASDAQ:VIR) are collaborating to develop multiple drugs and vaccines to treat and prevent COVID-19, the disease caused by the new coronavirus. The news drove shares of Vir up 30% at 1:39 ET on Monday, substantially higher than the 5% or so that the broader markets are up. GlaxoSmithKline, which is substantially larger and won't benefit as much from the potential new products, is up just 2%.

The collaboration will take several approaches to develop the drugs. The most advanced are two antibodies, VIR-7831 and VIR-7832, developed by Vir to treat severe acute respiratory syndrome (SARS), which is also caused by a coronavirus. The antibodies were developed from a patient who recovered from SARS. The companies plan to start a phase 2 clinical trial within the next three to five months.

Masked doctor listening to the heart of a patient in a face mask

Image source: Getty Images.

Further down the line, Vir and GlaxoSmithKine are using Vir's CRISPR screening technology to identify proteins that the coronavirus uses to infect cells. The companies could then develop drugs that target those proteins to block the viral infection.

GlaxoSmthKline and Vir also plan to combine GSK's vaccine technologies with Vir's expertise in identifying viral proteins that are most likely to produce antibodies that will react to an entire viral family. The companies hope to develop a vaccine that would protect patients not only from the coronavirus that causes COVID-19 but also other future coronaviruses.

The companies didn't disclose financial terms of the deal, but they did note that GlaxoSmithKline is making a $250 million investment in Vir at a share price of $37.73.

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