The USA’s Immunomedics (Nasdaq: IMMU) saw its shares surge more than 30% to $5.60 in mid-morning trading, after the company announced a licensing deal for its investigational cancer drug that could net it $2 billion.
Under the deal with Seattle Genetics (Nasdaq: SGEN), the latter would receive exclusive worldwide rights to develop, manufacture and commercialize sacituzumab govitecan (IMMU-132). Sacituzumab govitecan is an antibody-drug conjugate (ADC) targeted to TROP-2, which is expressed in several solid tumors including cancers of the breast, lung and bladder. Seattle’s shares were down 4.3% at $60.09 mid-morning.
Sacituzumab govitecan is in a Phase I/II trial for patients with triple negative breast cancer (TNBC), as well as multiple other solid tumors. It received Breakthrough Therapy designation from the US Food and Drug Administration for the treatment of patients with TNBC who have failed prior therapies for metastatic disease. Data from the Phase I/II trial are intended to serve as the basis for a planned Biologics License Application (BLA) submission under the FDA’s accelerated approval regulations.
Terms of the agreement
The agreement provides for potential payments of around $2 billion across multiple indications, plus double-digit tiered royalties on global net sales. Under the terms of the agreement, Immunomedics will receive $250 million in upfront cash payment, plus, among other milestone payments, an additional $50 million (or negotiated economic splits) relating to rights outside the USA, Canada and the European Union.
The remainder of the consideration comprises about $1.7 billion that is contingent on achieving certain clinical, development, regulatory and sales milestones, including an anticipated near-term milestone for acceptance of the Biologics License Application (BLA) by the FDA for TNBC, additional milestones based on regulatory approval of IMMU-132 for TNBC in the USA and other territories, and future development and regulatory milestones for additional indications beyond TNBC. Future royalty payments are tiered double-digit royalties based on global net sales. In addition, Immunomedics will retain the right to elect to co-promote IMMU-132 in the USA by participating in 50% of the sales effort, subject to certain parameters set forth in the agreement.
“This agreement would add a promising late-stage ADC to our pipeline as we continue making progress towards our goal of becoming a global, multi-product oncology company. Sacituzumab govitecan would complement our existing pipeline by providing a potential near-term opportunity to commercialize a second drug in the United States, expand our international capabilities in Europe and elsewhere and extend our efforts in solid tumors,” said Clay Siegall, president and chief executive of Seattle Genetics.
Concurrent with the transaction, Seattle Genetics is purchasing about $15 million of common stock, representing a 2.8% stake in Immunomedics, with a right to raise it to 9.9% through its purchase of three-year warrants.