On Monday November 24th 2014 NewLink Genetics (NLNK) had announced that it had entered into a partnership agreement with Merck (MRK) to co-develop an experimental vaccine for Ebola known as rVSV-EBOV. Under the terms of the agreement Merck will pay an upfront payment to NewLink for $50 million dollars plus additional money from royalty on the Ebola candidate once it hits the market. Although Merck got a good deal out of it because in addition to splitting revenue Merck obtains the ability to develop additional products from the vaccine itself. For instance if that same vaccine technology rVSV-EBOV can be applied to other diseases as well then Merck has the right to develop it.

Although NewLink didn’t create the rVSV-EBOV vaccine themselves. It was actually created by a group of scientists in Canada known as the Public Health Agency Of Canada — PHAC. The PHAC is a wholly-owned subsidiary of NewLink Genetics but the PHAC only contain non-commercial rights to the product. The clinical testing for rVSV-EBOV is currently in a phase 1 clinical trial and based on early efficacy data an additional mid-stage study would be initiated sometime in 2015. NewLink Genetics is primarily a biotech company focused on creating immunotherapy products against cancer but its technology can also be applied to other diseases as well. NewLink has already proven itself against many different cancer targets. For instance the company is also running two phase 3 trials in pancreatic cancer. Just the fact that it was able to pass phase 2 testing in pancreatic cancer with good results in itself is remarkable.

Despite this good news though on the partnership with Merck for the rVSV-EBOV vaccine the share price fell down slightly by 2% on the day on the announcement. NewLink right now has a market capitalization of $1.1 billion dollars and trades at $38.47 per share. Although in the following two days after the news of the partnership the share price went up a combined 11%. We think though that the Ebola Vaccine can add substantial value to the company. It won’t be a huge ability to sell on the open market but it will make good on supplying a lot of governments that want mass production to stockpile against the Ebola disease. Even without the Ebola Vaccine NewLink has a lot of cancer compounds in the pipeline ranging from Melanoma – skin cancer, pancreatic cancer, prostate cancer, and many other oncology compounds. The company uses biological products to activate specific T-cells that will be used to go out and target only cancerous cells in the human body. The ability to activate T-cells in the patients body and allow them to only target cancerous cells leaving healthy cells along is known as immunotherapy.  These types of immunotherapy companies are becoming more prevalent and the old ways of using toxic chemotherapy to treat cancer will be put to rest in the future.