Please ensure Javascript is enabled for purposes of website accessibility

Why Lineage Cell Therapeutics Stock Popped Today

By Prosper Junior Bakiny - Updated Apr 20, 2021 at 4:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company announced a license agreement.

What happened?

Shares of clinical-stage biotech Lineage Cell Therapeutics (LCTX 4.70%) rose sharply on Tuesday after the company announced a worldwide license agreement with privately held biotech Immunomic Therapeutics. Lineage Cell Therapeutics' stock rose as much as 10.6% but closed the day by 4.6%. 

So what

Per the terms of the deal, Lineage Cell Therapeutics and Immunomic Therapeutics will collaborate to develop a potential cancer therapy derived from Lineage's VAC allogeneic cancer immunotherapy platform. While the two entities will initially work together on this project, Immunomic Therapeutics will, at some point, assume full responsibility for the clinical development and commercialization of the candidate.

Lineage Cell Therapeutics will receive an upfront payment of $2 million in the first year, with additional development and commercial milestone payments reaching up to $67 million. Lineage Cell Therapeutics will also be eligible to receive royalties of up to 10% of the sales of this product.

Microscopic view of cancer cell.

Image source: Getty Images.

Now what

Lineage Cell Therapeutics doesn't currently have any products on the market, and none of its candidates are even close to commercialization. As such, the company generates little by way of revenue. During the fiscal year 2020, the company recorded total revenue of $1.8 million, mostly from grants and royalties.

Thanks to this deal with Immunomic Therapeutics, the biotech company should be able to improve its top line in the coming quarters, which will help it fund its clinical programs. These factors explain why investors bid up shares of Lineage Cell Therapeutics today. 

Prosper Junior Bakiny 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Lineage Cell Therapeutics, Inc. Stock Quote
Lineage Cell Therapeutics, Inc.
$1.56 (4.70%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/11/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.