Incyte's Stock Surges After Receiving Milestone Payment From Eli Lilly

Shares of Incyte Corp. surged 4% in premarket trade Tuesday, after Eli Lilly & Co. said it will make a $35 million milestone payment to the biopharmaceutical company following the companies' submission of a new drug application for a rheumatoid arthritis treatment. Eli Lilly said it will take a charge of $35 million to first-quarter earnings as a results. If the treatment--baricitinib--is granted approval, Lilly will pay Incyte an additional $100 million. Incyte will also be eligible for milestone payments for additional regulatory approvals and the achievement of sales goals, as well as royalties on baricitinib sales. "Lilly's collaboration with Incyte has produced a rigorous phase 3 program and, if approved, the potential of a promising new treatment option for people with RA," said David Ricks, president of Lilly Bio-Medicines. Lilly's stock was still inactive ahead of the open. Over the past three months, Incyte's stock has plunged 30% through Friday, while Lilly's has gained 1.2% and the S&P 500 has lost 7.5%.