Drug development firm Icagen, which recently lost its major development partner, has found a new one plus a deal that could produce $1 billion.

Icagen (Nasdaq: ICGN) said Tuesday morning that it had signed a drug development contract with Pfizer that provides immediate cash, an investment in stock, and three product research deals worth as much as $359 million each plus royalties.

Icagen stock soared 23 percent, or 44 cents, to $2.36 in mid-day trading. It had reached as high as $2.80 shortly after the markets opened.

However, by day’s end, Icagen shares finished up only 16 cents, or 8 percent, at $2.08.

The two firms will focus on technology developed by Icagen that could prove useful in pain relief.

In April, Icagen terminated development of its lead product, which was intended to treat sickle cell disease. The failure of that drug cost Icagen its partnership with McNeil Pharmaceuticals, a division of Johnson & Johnson. Icagen stock sank as low as 66 cents over the past year after the announcement about trouble with the sickle cell drug.

Under the deal with Pfizer, Icagen receives an upfront fee of $12 million. Pfizer also agreed to purchase $5 million worth of Icagen stock. That amount could increase to $15 million over the next 18 months.

The $359 million for each of the three products would include research, development, regulatory and milestone payments.

Pfizer will pay $1.86 per share for the first $5 million stock buy.

Under the agreement, Icagen and Pfizer will form a joint research committee, but Pfizer will fund “all aspects of the collaboration,” Icagen said in a statement. Pfizer will receive worldwide commercialization rights.

Icagen has disclosed advances recently in its research to use so-called ion channels to target pain.

"We are enthusiastic about entering into this collaboration with Pfizer," said P. Kay Wagoner, Icagen’s chief executive officer. "By combining one of our multi-target ion channel pain programs with similar programs at Pfizer, we believe that together our scientific teams will be well positioned to capitalize upon this exciting therapeutic opportunity.
“Given that there are three different ion channel targets in the collaboration, we believe that there is a possibility for at least three unique products to emerge from this joint effort,” she added. “It is a distinct privilege to join forces with Pfizer as we continue to advance our mission of discovering and developing novel medications that address areas of real medical need. The formation of this collaboration further underlines Icagen’s commitment to bringing new treatment options for pain to patients and physicians worldwide."

In July, Icagen filed an investigational new drug application with the U.S. Food and Drug Administration for a compound that the company said had shown promise in animal trials.

The drug is called ICA-105665. Icagen is developing compounds that work on ion channels that are fundamental to such processes as muscular movement.