Ocular Therapeutix Inc. (NASDAQ: OCUL) shares jumped early on Thursday after a new partnership was announced with Regeneron Pharmaceuticals Inc. (NASDAQ: REGN). Specifically, these companies will collaborate on the development of a sustained release formulation of the vascular endothelial growth factor (VEGF) trap aflibercept for the treatment of wet age-related macular degeneration (wet AMD) and other serious retinal diseases.

Under the terms of the agreement, Ocular Therapeutix and Regeneron are attempting to develop a sustained release formulation of aflibercept that is suitable for advancement into clinical development.

Also Regeneron has the option to obtain an exclusive license to use Ocular Therapeutix’s hydrogel-based technology for the development and commercialization of a sustained release formulation of aflibercept and other biologics targeting VEGF for ophthalmic indications.

However, upon exercising of the option, Ocular Therapeutix would receive a payment of $10 million from Regeneron and Ocular Therapeutix would be responsible for funding development through Phase 1. Regeneron would be responsible for any subsequent development and commercialization costs. Ocular Therapeutix would be eligible to receive up to $305 million in milestone payments from Regeneron for a sustained release version of aflibercept containing Ocular Therapeutix’s sustained release hydrogel depot. At the same time, Ocular Therapeutix is eligible to receive tiered high single-digit to low-to-mid teen-digit royalties on potential future net sales.

Keep in mind that Ocular Therapeutix had a market cap of about $156 million prior to Thursday’s move.

Additionally, Ocular Therapeutix would retain all rights to develop its sustained-release hydrogel-based drug delivery platform with all other non-VEGF targeting compounds as well as with small molecule pharmaceuticals, including TKIs, for other retinal diseases.

Amar Sawhney, Ph.D., president, chief executive officer and board chair of Ocular Therapeutix, commented:

We have made considerable progress in developing our protein drug delivery platform at Ocular Therapeutix, so it is good to see an industry leader such as Regeneron recognizing the potential of this technology. We are excited to partner with Regeneron to develop a potential first-in-class sustained release protein-based anti-VEGF hydrogel injection for wet AMD, DME, RVO, and other serious retinal diseases. This sustained release formulation could have the potential to significantly reduce dosing frequency and subsequently reduce doctor visits, thus reducing the burden of care for patients, caregivers and physicians, and may decrease the likelihood of certain side effects associated with frequent intravitreal injections.

Shares of Ocular Therapeutix closed Wednesday down 3% at $6.31, with a consensus analyst price target of $30.60 and a 52-week trading range of $4.04 to $17.34. Following the announcement the stock was up initially about 27% at $8.06 in early trading indications Thursday.

Regeneron closed down 3% at $373.47, with a consensus price target of $467.73 and a 52-week range of $329.09 to $592.59. The stock was down nearly 1% at $370.00 in early trading indications.

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