TechBio company Evaxion A/S has successfully out-licensed its AI-discovered vaccine candidate EVX-B3 to pharmaceutical giant Merck & Co. (MSD) under an option and license agreement originally established in September 2024. The deal represents a significant validation of Evaxion's artificial intelligence-driven vaccine discovery platform and provides substantial financial backing for the company's operations.
Financial Terms and Market Impact
Under the licensing agreement, Evaxion will receive an immediate cash payment of $7.5 million, with eligibility for future development, regulatory and sales milestone payments totaling up to $592 million, plus royalties on net sales. Merck will assume complete responsibility and bear all costs for the continued development of the EVX-B3 vaccine candidate.
The announcement had an immediate positive impact on Evaxion's stock performance, with shares surging 27.27% to $4.20 on Thursday, representing a gain of $0.79 from the previous close of $3.30. Trading volume spiked dramatically to 71.4 million shares, significantly exceeding the average volume of 92,139 shares. The stock traded within a range of $3.91 to $4.75 during the session.
EVX-B3 Vaccine Candidate Profile
EVX-B3, currently in preclinical development, addresses what Evaxion describes as "a serious global medical issue." The vaccine candidate targets a pathogen associated with repeated infections, increasing incidence rates, and often serious medical complications. Notably, no vaccines are currently available for this particular pathogen, highlighting a significant unmet medical need in the global healthcare landscape.
The vaccine candidate was identified using Evaxion's proprietary AI-Immunology platform, which the company states demonstrates "the platform's unique ability to uncover novel targets that would otherwise remain undiscovered." This technological approach represents a growing trend in pharmaceutical development where artificial intelligence is being leveraged to identify previously overlooked therapeutic targets.
Extended Collaboration and Pipeline Development
The EVX-B3 licensing deal builds upon a broader collaboration between Evaxion and Merck that was originally established in September 2023. The partnership was subsequently expanded in September 2024 through the option and license agreement, which also encompasses EVX-B2, a preclinical vaccine candidate targeting gonorrhea.
The companies have agreed to extend the evaluation period for EVX-B2 following an expansion of the initial evaluation plan that encompasses additional experiments. As a result of this extension, a decision on potential in-licensing of EVX-B2 by Merck is now expected in the first half of 2026.
Should Merck exercise its option on EVX-B2, Evaxion would receive a cash payment of $2.5 million and become eligible for future development, regulatory and sales milestone payments of up to $592 million, along with royalties on sales under terms similar to those established for EVX-B3.
Financial Runway Extension
The $7.5 million cash payment from the EVX-B3 licensing deal provides Evaxion with extended financial stability, extending the company's cash runway into the first half of 2027. This financial cushion allows the company to continue operations and advance its pipeline while Merck takes over the development responsibilities and associated costs for EVX-B3.
