Shares of Seattle Genetics are soaring more than 10% this morning after the Bothell, Wash.-based biotechnology company struck a deal with Merck in which the pharmaceutical powerhouse will provide a $600 million upfront payment and make a $1 billion equity investment to continue development of treatments for breast cancer.
Merck is purchasing 5 million shares of Seattle Genetics at $200 per share as part of the deal, which focuses on Seattle Genetics’ experimental LIV-1 product, currently in Phase 2 clinical trials. As part of the deal, Seattle Genetics could receive $2.6 billion if development milestones are met, and another $1.75 billion if sales milestones are reached.
The companies also said they plan to share the costs of developing LIV-1, with a 50-50 split on future costs and profits. Merck will also integrate the Seattle Genetics R&D efforts with its own Keytruda breast cancer treatment program, part of an ongoing collaboration between the two companies.
Fierce Biotech reports that the Merck usually doesn’t make large bets of this kind on biotechnology products. The news site notes that the deal with Seattle Genetics comes within hours of Gilead Sciences agreeing to buy Immunomedics for $21 billion. Immunomedics, like Seattle Genetics, is developing antibody drugs for breast cancer.
Seattle Genetics and Immunomedics once worked closely together on cancer treatments, but the $2 billion collaboration ended abruptly in 2017 after a messy split.
In addition to the collaboration on LIV-1, Merck agreed to pay $125 million to Seattle Genetics for an exclusive license for Tukysa, a treatment for HER-2-positive cancers in regions outside of the U.S.
Merck will own about 2.9 percent of Seattle Genetics once the deal concludes, The Wall Street Journal reports. Seattle Genetics employs about 1,800, and boasts a market value of $29 billion.
Seattle Genetics CEO Clay Siegall said the Merck collaboration will accelerate its breast cancer and other solid tumor programs.
Here’s how Seattle Genetics explains the science behind Ladiratuzumab vedotin, an antibody-drug conjugate known as LIV-1.
Most metastatic breast cancers express LIV-1, which also has been detected in a number of other cancers, including melanoma, prostate, ovarian, uterine, and cervical cancers. Ladiratuzumab vedotin consists of a LIV-1-targeted monoclonal antibody linked to a potent microtubule-disrupting agent, monomethyl auristatin E (MMAE) by a protease-cleavable linker. This novel ADC agent is designed to bind to LIV-1 on cancer cells and release the cell-killing agent into target cells upon internalization. Ladiratuzumab vedotin may also cause antitumor activity through other mechanisms, including activation of an immune response.
More on the deal in the Seattle Genetics press release here.
