CytomX Therapeutics Inc. (NASDAQ: CTMX) shares saw a solid gain in Wednesday’s session following announcement of a strategic collaboration with Amgen Inc. (NASDAQ: AMGN) in immuno-oncology. The companies are planning to co-develop a CytomX Probody T-cell engaging bispecific against the epidermal growth factor receptor (EGFR), a highly validated oncology target expressed on multiple human cancer types.

It’s worth pointing out that in preclinical studies, CytomX’s Probody versions of EGFRxCD3 bispecific therapeutics induced tumor regressions and increased the therapeutic window for this high-potential cancer target.

Under the terms of the agreement, CytomX will lead early development and Amgen will lead later development and commercialization with global late-stage development costs shared between the two companies. Amgen will make an upfront payment of $40 million and purchase $20 million of CytomX common stock.

Although this might not seem like that much money at first, there is a lot more reserved for milestone payments and royalties.

Also CytomX will be eligible to receive up to $455 million in development, regulatory and commercial milestones for the EGFR program. Amgen will lead global commercial activities with CytomX able to opt into a profit share in the United States and receive tiered, double-digit royalties on net product sales outside of the country.

In the release, the companies expanded on the agreement:

Amgen will also receive exclusive worldwide rights to develop and commercialize up to three additional, undisclosed targets. Should Amgen ultimately pursue all of these targets, CytomX will be eligible to receive up to $950 million in additional upfront and milestone payments and high single-digit to mid-double digit royalty payments on any resulting products. CytomX will also receive the rights from Amgen to an undisclosed preclinical T-cell engaging bispecific program; Amgen is eligible to receive milestones and royalty payments on any resulting products from this CytomX program.

Shares of CytomX were last seen up just over 20% at $22.90, with a consensus analyst price target of $31.25 and a 52-week range of $9.85 to $24.67. The company has a total market cap of about $840 million.

Amgen shares were up 0.6% at $188.42. The stock has a 52-week range of $133.64 to $191.10 and a consensus price target of $188.45.

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