Entrada Therapeutics (TRDA) inked a $250 million deal with Vertex Pharmaceuticals (VRTX) to develop a muscular dystrophy drug, and the biotech stock surged.
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Under the terms of the deal, Vertex will pay Entrada $224 million in cash. It also will make a $26 million equity investment in the company. In exchange, Entrada will hand over its myotonic dystrophy 1 drug to Vertex for global development, manufacturing and commercialization.
Vertex will also have dibs on any other potential myotonic dystrophy 1 drugs coming out of Entrada’s research. Myotonic dystrophy is a form of muscular dystrophy in which patients are unable to relax certain muscles following contractions.
Entrada will also be eligible for up to $485 million in future milestone payments and tiered royalties. That’s based on future net sales for any products that come out of the Vertex collaboration.
Biotech Stock: Focusing On Another Drug
Entrada Chief Executive Dipal Doshi called myotonic dystrophy 1 “a progressive disease with no treatment options available.”
“Working with Vertex will enable us to expeditiously move this program forward, while focusing the majority of our internal resources on advancing new therapeutic options for patients living with Duchenne and expanding our commitment to non-neuromuscular disease programs,” he said in a written statement.
Entrada is in late-state lab testing of a potential treatment for Duchenne muscular dystrophy, or DMD. Duchenne muscular dystrophy is characterized by the absence of the dystrophin protein, needed to keep muscle cells intact. Evercore ISI analyst Jonathan Miller says the infusion from Vertex extends Entrada’s cash runway by a year. That will take it out to the second half of 2025.
“They’ve got best-in-class preclinical data — but translatability from animal models in DMD has always been challenging,” Miller said in a note to clients. “Having a nice balance sheet heading into those initial readouts will give them maximum flexibility to keep turning over cards.”
In early trading on today’s stock market, biotech stock Entrada rocketed 15.3% near 20.40.
Though Entrada is only about a year out from its initial public offering, shares have a strong Relative Strength Rating of 98, according to IBD Digital. This puts them in the top 2% of all stocks in terms of 12-month performance. Vertex stock rose 1.3% near 321.80.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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Read More: Biotech Stock Entrada Surges On $250 Million Muscular Dystrophy Deal With Vertex