Seattle Genetics has agreed to pay $250 million up front for global rights to an Immunomedics cancer drug that it says complements the company’s pipeline of experimental antibody cancer therapies.
If SeaGen (NASDAQ: SGEN) is able to bring the drug to market, the Bothell, WA-based company would be on the hook for up to $1.7 billion more in milestone payments to Immunomedics (NASDAQ: IMMU). But it’s not yet a done deal. According to the agreement between the companies, Morris Plains, NJ-based Immunomedics still has an unspecified “limited period of time” to keep talking with other suitors that had previously expressed interest in licensing the drug. If anyone else beats SeaGen’s offer, SeaGen still has the right to match it.
It’s not clear whether anyone else will step in with a better offer. Immunomedics has been shopping itself and its drug for some time without finding any takers. The stumbling block has been an ongoing proxy fight aiming to force out the company’s founding executives in order to facilitate a sale of the company, according to a report in TheStreet last month. The SeaGen deal was welcomed by Immunomedics’ investors. Shares in the company were up 27 percent to $5.47 Friday morning. Meanwhile, SeaGen’s stock price dipped 2.9 percent to $60.97 per share.
The Immunomedics drug sacituzumab govitecan is an antibody-drug conjugate, or ADC, a type of drug that links antibodies to anti-cancer toxins. These drugs are intended to offer a targeted approach to cancer therapy that spares healthy tissue. Sacituzumab govitecan targets TROP-2, a receptor on the surface of solid tumors, including those of breast, lung, and bladder cancers. Immunomedics has taken it into Phase 1/2 clinical trials for triple negative breast cancer.
The FDA has already granted “breakthrough therapy designation” status for the Immunomedics drug as a potential treatment for patients with triple negative breast cancer who have failed earlier therapies for the disease. That status—reserved for drugs that show substantial improvement over existing therapy in treating a life-threatening condition—paves the way for filing for accelerated approval based on the early clinical data.
If Immunomedics decides not to accept SeaGen’s deal and instead selects a better offer, the company would have to pay SeaGen a termination fee. But SeaGen is putting up more money to show its commitment to Immunomedics and its drug. SeaGen is buying $15 million worth of Immunomedics stock, which represents a 2.8 percent stake in the company. Immunomedics has also granted SeaGen the right to purchase 8.6 million more Immunomedics shares at $4.90 per share for a certain period of time. The companies say that the stock purchase and rights are not subject to the closing of the development and license agreement.
SeaGen’s own drug pipeline includes a dozen ADC candidates in various stages of clinical testing for various cancers. In a prepared statement, SeaGen CEO Clay Siegall said that the agreement with Immunomedics gives his company a promising late-stage, anti-drug conjugate candidate, further diversifying the SeaGen pipeline.
Photo by Kevin Janes of the National Cancer Institute.