A venBio campaign against a drug licensing deal between Immunomedics and Seattle Genetics has unwound the pact altogether. Three months after dealing for rights to an experimental breast cancer therapy from Immunomedics, SeaGen is now walking away due to delays and litigation that venBio, a biotech investment firm, brought against both parties.
Meanwhile, Immunomedics (NASDAQ: IMMU) is charting its own path forward, raising $125 million in a stock sale to private investors to support development of the drug that Bothell, WA-based SeaGen (NASDAQ: SGEN) had hoped to bring to market.
The move still needs court approval. But even when the legal paperwork is finalized, SeaGen will continue to hold shares of Immunomedics, as well as a warrants to purchase even more. SeaGen had agreed to those terms as part of its original deal with the Morris Plains, NJ, company.
In February, SeaGen agreed to pay $250 million up front, and as much as $1.7 billion more in milestone payments, for sacituzumab govitecan, a drug that Immunomedics had taken into Phase 1/2 clinical trials for triple negative breast cancer. The Immunomedics drug is an antibody drug conjugate, or ADC. SeaGen specializes in this type of drug, which carries a payload of anti-cancer toxins to tumors in an approach that is meant to spare healthy tissue. The company had planned to add the drug to its own pipeline of ADCs.
The licensing deal allowed Immunomedics to seek a better offer, as long as SeaGen had the opportunity to match it. It’s not clear whether other bidders stepped forward, but the deal was panned by Immunomedics’ largest shareholder, venBio, which has actively pushed the company in a different direction. VenBio had long been critical of the New Jersey company’s management, and that criticism increased following the SeaGen deal. In a February letter to shareholders, venBio characterized the agreement as a “rushed deal that does not deliver shareholder value.” VenBio then sued Immunomedics and named SeaGen as a co-defendant. In March, directors backed by venBio took control of Immunomedics’ board.
The legal wrangling became too much for SeaGen. On Thursday, SeaGen and Immunomedics agreed to walk away from the deal, according to a SeaGen securities filing. In doing so, both Immunomedics and venBio will settle and release SeaGen from the legal spat between the New Jersey company and its largest shareholder.
Immunomedics and venBio have also agreed to end their legal dispute. The settlement affirms the Immunomedics board of directors and calls for the company to reimburse venBio for the costs of the proxy fight, according to an Immunomedics filing. Immunomedics will now use the cash from the stock offering to develop sacituzumab govitecan on its own, with the goal of filing for accelerated approval from the FDA.
Immunomedics also announced that Cynthia Sullivan will step down from her CEO and director positions. CFO Michael Garrone will become interim CEO. The settlement also calls for David Sullivan, the founder of Immunomedics, to step down as chief scientific officer and chief patent officer. He will, however, remain on the company’s board.
Though SeaGen is pulling out of the licensing deal with Immunomedics, it still has a stake in that company’s future. Under the termination agreement, SeaGen will hold on to the 3 million shares of the company that it bought as part of the original licensing deal. SeaGen also holds a warrant to purchase 8.7 million additional shares at $4.90, which it can exercise until Dec. 31. Immunomedics shares leaped 23 percent to $6.68 Friday morning. Shares in SeaGen dipped 3 percent to $61.78.
Public domain Image of triple negative breast cancer by Kevin Janes of the National Cancer Institute.