Shares of AGTC (AGTC) are up 22% premarket after announcing a collaboration deal with Biogen (BIIB) to develop gene-based therapies for multiple ophthalmic ophthalmic diseases using AGTC's adeno-associated virus "AAV" gene therapy platform. This deal incorporates all of AGTC's eye therapies currently under development along with one non-ophthalmic disease therapy as well. 

Two potential candidates are therapies for X-linked Retinoschisis, currently in clinical trials, and for X-linked Retinitis Pigmentosa, in pre-clinical stage; both are rare diseases. X-linked Retinoschisis leads to eventual vitreous hemorrhage or retinal detachment. X-linked Retinitis Pigmentosa leads to night-blindness by 10 years of age and then legal blindness by the early 40's. 

Biogen will make an upfront payment to AGTC of about $124 million for this collaboration. Of that $124 million, $30 million is being put into AGTC as an equity investment for Biogen along with prepaid research expenditures. Biogen will be given the license for both the X-Linked Retinitis Pigmentosa and X-linked Retinoschisis programs. In addition Biogen will be give option to license three clinical candidate programs at the time of clinical candidate selection. 

Such other programs AGTC is working on are: Macular Degeneration, Achromatopsia, and Alpha-1 Antitrypsin Deficiency. Under the entire collaboration AGTC is set to receive about $1 Billion or more in upfront payments and milestone payments. The two lead programs mentioned above -- X-linked -- will receive $472.5 million and the possibility for AGTC to receive single-digit to mid-teen royalty percentages upon marketing of the drug products.

In addition, AGTC's pre-clinical programs will receive up to $592.5 million and will also allow AGTC to receive single-digit to mid-teen royalty percentages upon marketing of these drug products. Biogen will also be able to license AGTC's AAV gene technology for up to six gene targets, three of which are at the sole discretion of AGTC.

This collaboration deal is a great one for AGTC as it is receiving a lot of upfront and milestone payments that will carry it to later stages without the need to dilute for cash.