What happened

Shares of Translate Bio (NASDAQ:TBIO), a clinical-stage biotechnology company, jumped today after the company announced an expanded partnership with Sanofi (NASDAQ:SNY) that includes the development of a coronavirus vaccine candidate. Investors excited about the collaboration expansion pushed the stock 45.6% higher as of 10:38 a.m. EDT on Tuesday.

So what 

Sanofi and Translate Bio have been working together to develop messenger RNA (mRNA) vaccines for undisclosed diseases since 2018. In March, the two expanded their partnership beyond the original agreement to include an mRNA vaccine candidate directed against SARS-CoV-2, the virus that causes COVID-19.

Person in a jetpack.

Image source: Getty Images.

Translate Bio stock is surging today because Sanofi has taken their collaboration much further. The pharma giant will give Translate $425 million up front for exclusive rights to multiple infectious disease vaccines, including a SARS-CoV-2 candidate. Translate is eligible to receive tiered royalty payments based upon worldwide sales of any successful vaccines at an undisclosed percentage, and milestone payments that could add up to $1.9 billion in total.

Now what

Sanofi will pay for all costs during the term of the collaboration. The partners are currently evaluating multiple SARS-CoV-2 vaccine candidates, but they probably won't select one to advance into human proof-of-concept trials until the fourth quarter of 2020.

Translate Bio finished March with $155 million in cash and securities on its balance sheet after losing $14 million during the first three months of 2020. With Sanofi paying the bills for the development of its vaccines, Translate can turn its attention back to its cystic fibrosis program.