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Why Foghorn Therapeutics Is Rising In Pre-market?

Loxo Oncology at Lilly (LLY), and Foghorn Therapeutics Inc. (FHTX) have entered a strategic collaboration to create oncology medicines by applying Foghorn's Gene Traffic Control platform. Foghorn will receive upfront consideration of $300 million in cash for the collaboration agreement. Foghorn will also receive an equity investment by Lilly of $80 million in Foghorn common shares at a price of $20 per share.

The collaboration includes a co-development and co-commercialization agreement for Foghorn's selective BRM oncology program and an additional undisclosed oncology target. Foghorn is eligible to receive royalties on ex-U.S. sales starting in the low double-digit range and escalating into the twenties.

Also, the collaboration includes three additional discovery programs using Foghorn's Gene Traffic Control platform. Foghorn may receive up to a total of $1.3 billion in potential development and commercialization milestones.

Lilly noted that there will be no change to the company's 2021 non-GAAP earnings per share guidance as a result of the deal.

Foghorn Therapeutics is developing multiple product candidates in oncology with two currently being investigated in clinical studies.

Shares of Foghorn Therapeutics were up 33% in pre-market trade on Monday.

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