Xilio Therapeutics’ XLO shares surged 79.8% in a month, driven by the company’s decision to enter into an exclusive license agreement with Gilead Sciences GILD to develop and commercialize XLO’s investigational oncology candidate, XTX301.

XTX301 is Xilio’s tumor-activated IL-12, developed using the company’s proprietary tumor-activation platform, which is expected to have potential therapeutic benefit, both as a monotherapy and in combination therapy to treat a variety of solid tumors.

XTX301 is currently being evaluated in a phase I dose-escalation study in patients with advanced solid tumors.

The licensing agreement seeks to leverage Gilead Sciences’ deep expertise in developing and commercializing novel immuno-oncology products to accelerate the development timeline of XTX301. On the other hand, the addition of XTX301 to GILD’s pipeline of difficult-to-treat cancer therapies is expected to expand its immuno-oncology portfolio.

Year to date, shares of Xilio have skyrocketed 121.8% against the industry’s 7.9% decline.

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Per the terms of the agreement, upfront payments payable by Gilead Sciences to Xilio are $43.5 million, partly in cash and as an initial equity investment, for the XTX301 global license grant. XLO has already received the initial equity investment of $13.5 million. The $30 million upfront cash payment is payable by GILD shortly after the closing of the license agreement.

Furthermore, Xilio remains eligible to receive up to $604 million in additional contingent payments from GILD, which comprise additional equity investments, a transition fee and certain pre-specified development, regulatory and sales-based milestones.

Upon potential commercialization of XTX301, XLO will also be eligible to receive tiered royalties ranging from high single digits to mid-teens on annual global net product sales.

Currently, Xilio is responsible for conducting clinical development of XTX301 in the ongoing phase I study in patients with advanced solid tumors.

If the company succeeds in providing a specified clinical data package for XTX301, it will trigger additional equity investments and a development milestone payment from Gilead Sciences. Based on such phase I results, GILD will have the option to transition responsibilities for the development and commercialization of XTX301 to itself, subject to the terms of the agreement and payment of transition fees to Xilio.

XLO anticipates reporting phase I safety, pharmacokinetic and pharmacodynamic data for XTX301 in patients with advanced solid tumors in the fourth quarter of 2024.