'Turning point': why did Vir Biotech's small-cap biotech quotes soar by a quarter?

Quotes of Vir Biotechnology, a small-cap developer of drugs against infectious diseases and cancer, soared on February 24 by almost 28%, reaching the maximum for more than a year. The company told investors about the "turning point", including, among other things, a partnership with the Japanese Astellas for a total amount of up to $1.71 billion. Against this background, several investment banks raised the target price for its securities.

Vir shares rose nearly 28% on the Nasdaq on Feb. 24-to $9.5, their highest level since early February 2025.

Investors reacted to several company announcements at once. First, it announced a strategic partnership with Japanese pharma giant Astellas, according to which the parties will jointly develop and bring to market a Vir development called VIR-5500, designed for prostate cancer patients.

Under the agreement, Astellas will receive exclusive rights to commercialize the VIR-5500 outside the U.S. and lead the process domestically. Vir, in turn, will receive $335 million in upfront and short-term milestone payments and share equally with Astellas the profit or loss in the US. In addition, the small-cap biotech is entitled to receive up to $1.37 billion in milestone payments for development, registration and sales of the drug, as well as "tiered double-digit royalties" on net sales outside the US.

A little later, Vir shared positive updated results from a Phase 1 clinical trial of VIR-5500 in patients with metastases who had failed previous treatments.

"This is a watershed moment for Vir Biotechnology," CEO Marianne De Backer said in the following press release on the company's financial results for the fourth quarter and full year 2025. According to it, Biotech's quarterly revenue grew 5.2 times to $64.1 million, largely due to an initial payment under another license agreement, with pharma company Norgine. That agreement, due in December 2025, relates to the development of Vir against chronic hepatitis D. Like the collaboration with Astellas, it also demonstrates the "strength of the company's development portfolio," according to De Backer.

In the morning trading on February 25, Vir's quotations were losing more than 2%. The night before, the company published one more news - about the planned additional public offering of shares worth up to $300 mln. In addition, underwriters will be entitled to securities worth up to $30 mln. Biotech did not disclose other parameters of the additional issue.

On the background of the company's news, at least three banks raised target prices for Vir securities, Yahoo Finance shows. Thus, Needham increased the target by almost 29% to $18, Evercore ISI - by 1.5 times also to $18, Morgan Stanley - by 20% to $24.

The company's securities have a total of nine ratings from Wall Street analysts: all recommend buying. The average target price is $20.25, which means the growth potential more than doubles.