BRUSSELS (Reuters) - Belgian biotech firm Ablynx (ABLX.BR) has signed a licensing agreement with U.S. drugmaker AbbVie (ABBV.N) worth up to $840 million for an experimental drug against rheumatoid arthritis and lupus.
Under the terms of the deal, Ablynx will receive an upfront payment of $175 million and may receive additional payments of up to $665 million, depending on the success of its product ALX-0061, which is currently in mid-stage clinical trials.
Ablynx will also be eligible to receive royalties on net sales, assuming the drug makes it to the market.
The group's shares jumped as much as 13.7 percent on Monday on the announcement, reaching their highest level in more than two years.
"This should attract the next level of investors and we anticipate the stock to stabilise at new highs," KBC analyst Jan De Kerpel wrote in a note to clients.
CEO Edwin Moses said the global licence agreement with AbbVie represented "a major milestone for Ablynx".
Ablynx produces so-called nanobody medicines derived from llama antibodies that are around one-tenth the size of normal antibodies, which means they may be better able to reach disease targets in the body.
In February, Ablynx said a Phase IIa clinical study of ALX-0061 showed promising results and the drug was well tolerated by the 37 rheumatoid arthritis patients who took the drug over the course of 24 weeks.
Ablynx will be responsible for completing Phase II clinical development of the drug.
The Belgian company will retain an option for co-promotion rights on ALX-0061 in Belgium, the Netherlands and Luxembourg.
(Reporting by Robert-Jan Bartunek; Editing by Ben Hirschler)