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What: Shares in Intrexon Corp (NYSE:XON) surged higher by as much as 10% today after Merck Serono inked a licensing deal for CAR-T research being done by Intrexon and its collaboration partner Ziopharm Oncology (NASDAQ:ZIOP).
So What: Merck Serono, the biopharmaceutical business of the Germany-based Merck KGaA (NASDAQOTH:MKGAY), is paying Intrexon Corporation and Ziopharm $115 million up front. Merck Serono has also agreed to pay the companies up to an additional $826 million in research and development, regulatory, and commercial milestones, as well as royalty payments on any sales generated through the collaboration efforts. Intrexon Corporation and Ziopharm will split these payments equally.
The agreement comes less than three months after Intrexon and Ziopharm cut a deal with the MD Anderson Cancer Center in January that allows the companies to leverage MD Anderson's research into CAR-T immunotherapies. Those CAR-T therapies reengineer the body's immune system to better recognize and destroy cancer cells.
If successful, CAR-T drugs could significantly reduce the safety concerns associated with current cancer therapies, which typically damage healthy and unhealthy cells simultaneously.
Now What: This collaboration is intriguing because it allows for the combination of Intrexon's rheoswitch technology, which can turn immunotherapies on and off, with Ziopharm and MD Anderson's extensive research into in vivo CAR-T therapies. Merck Serona's global size and deep pockets provide plenty of financial and research firepower that could quicken the pace of development for this technology, so this is a deal that should pique investors' interest.
However, before investors get too excited, they should realize that CAR-T therapies are in the early stages of development and that the failure rate of oncology drugs entering human clinical trials eclipses 90%. For that reason, a healthy dose of skepticism is warranted, especially since these immunotherapies could be years away from any shot at commercialization.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.