In a Nov. 21 research note, ROTH Capital Partners analyst Zegbeh Jallah reported that Harpoon Therapeutics Inc. (HARP:NASDAQ) and AbbVie Inc. (ABBV:NYSE) expanded their discovery and collaboration agreement and added to it a new component regarding Harpoon's HPN217.
"We believe that this is 1) a strong indication of AbbVie's confidence in the platform, 2) a superb strategic move for Harpoon to remain focused on its solid tumor efforts and 3) an excellent source of additional cash (up to $100 million likely to be received between now and H1/20)," commented Jallah.
The analyst described the changes made to the agreement.
Per the existing discovery and collaboration agreement executed in 2017, AbbVie has the exclusive rights to develop and commercialize Harpoon's TriTAC technology with the soluble T-cell receptor sequences targeting two agreed upon areas of interest. After the discovery phase, AbbVie alone is responsible for developing, manufacturing and commercializing any products born out of this arrangement with Harpoon.
The recently amended agreement, however, adds four more targets, taking the total to six. With each target there are $310 million in upfront and potential development, regulatory and commercial milestone payments and royalties on global net sales. "We've seen several of these agreements in the biospecific space and believe that this is a competitive offer for Harpoon," Jallah noted.
Also in the agreement is a new component, a licensing and option agreement regarding HPN217, Harpoon's Tri-TAC that targets the B-cell maturation antigen. The agreement grants AbbVie the worldwide rights to HPN217 for $510 million in upfront, option and milestone payments along with royalties on all sales. AbbVie may exercise the option aspect once Harpoon completes the Phase 1/2 trial of HPN217, slated to start by Q1/20.
"We find it particularly impressive that Harpoon was able to complete the agreement based on preclinical studies for HPN217, at a very competitive transaction value," Jallah indicated.
ROTH has a Buy rating and a $25 per share 12-month target price on Harpoon, whose stock is currently trading at around $18.19 per share.
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Disclosures from ROTH Capital Partners, Harpoon Therapeutics Inc., Flash Note, November 21, 2019
Regulation Analyst Certification ("Reg AC"): The research analyst primarily responsible for the content of this report certifies the following under Reg AC: I hereby certify that all views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
ROTH makes a market in shares of Harpoon Therapeutics Inc. and as such, buys and sells from customers on a principal basis.
ROTH Capital Partners, LLC expects to receive or intends to seek compensation for investment banking or other business relationships with the covered companies mentioned in this report in the next three months.
