US biotech Aveo Oncology saw its stock skyrocket more than 120% Monday after Novartis signed up for a license to its early-stage, first-in-class, experimental cachexia candidate AV-380, in a deal worth at least $326 million.

Cachexia, often a complication of cancer and other chronic diseases, is a complex metabolic syndrome linked with malnutrition and severe involuntary weight loss due to the loss of muscle and fat tissue, as well as the clinical manifestation of anaemia, inflammation and suppression of immune functions.

Aveo's antibody targets GDF15 - a pro-inflammatory cytokine elevated levels of which have been correlated with cachexia in cancer patients and several relevant animal models - and has caught Novartis’ eye after showing potential in preclinical trials.

Under the deal, the Swiss drug giant gains an exclusive, worldwide license to the drug, including full responsibility for clinical development and commercialisation. In return, Aveo stands to receive $15 million upfront, a stream of milestone payments totalling $311 million, and tiered royalties on product sales ranging from high single digits to a low double-digit.

The news is particularly sweet for Aveo which has received quite a battering in recent years from a long line of setbacks in its pipeline, most notably the demise of its flagship cancer candidate tivozanib.