On October 28, 2020 Seagen Inc. (Nasdaq: SGEN) reported the closing of a $1.0 billion equity investment by Merck in 5.0 million newly-issued shares of Seagen common stock at a price of $200 per share (Press release, Seagen, OCT 28, 2020, View Source [SID1234569210]). The closing occurred following expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The investment was made in connection with a global collaboration with Merck to co-develop and commercialize ladiratuzumab vedotin, an investigational antibody-drug conjugate (ADC) targeting LIV-1, which is currently in clinical trials for breast cancer and other solid tumors.
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"This investment by Merck further strengthens our balance sheet, and provides us with considerable financial resources to continue building Seagen as a global, multi-product oncology company," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seagen. "We are investing in broad clinical development of our approved products, advancing our late-stage programs and conducting R&D to ensure a robust early-stage pipeline of innovative therapies for the treatment of cancer."
The financial impact of the collaboration, including the stock purchase agreement, will be discussed during Seagen’s third quarter financial results conference call on October 29, 2020.
Ladiratuzumab Vedotin Collaboration Details
Under the terms of the agreement, Seagen and Merck will collaborate and equally share costs on the global development of ladiratuzumab vedotin and other LIV-1-targeting ADCs. The companies have agreed to jointly develop and share future costs and profits for ladiratuzumab vedotin on a 50:50 basis worldwide. Merck paid Seagen $600 million upfront and made a $1.0 billion equity investment in 5.0 million shares of Seagen common stock at a price of $200 per share in connection with entry into the agreement. In addition, Seagen will be eligible to receive up to $2.6 billion in milestone payments, including $850 million in development milestones and $1.75 billion in sales milestones.
The companies will jointly develop and commercialize ladiratuzumab vedotin and equally share profits worldwide. The companies will co-commercialize in the U.S. and Europe. Seagen will be responsible for marketing applications for approval in the U.S. and Canada, and will record sales in the U.S., Canada and Europe. Merck will be responsible for marketing applications for approval in countries outside the U.S. and Canada, and for sales efforts in countries outside the U.S., Europe and Canada. Including the upfront payment, equity investment proceeds and potential milestone payments, Seagen is eligible to receive up to $4.2 billion.
About Ladiratuzumab Vedotin
Ladiratuzumab vedotin is a novel investigational ADC targeted to LIV-1. Most metastatic breast cancers express LIV-1, which also has been detected in several other cancers, including lung, head and neck, esophageal and gastric. Ladiratuzumab vedotin utilizes Seagen’s proprietary ADC technology and 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 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 by induction of immunogenic cell death.