Immunomedics in up to $2 billion licensing deal with Seattle Genetics

Drug developer Immunomedics Inc said it entered into a development and licensing deal for its experimental cancer drug with Seattle Genetics Inc for a potential payment of up to $2 billion.

Immunomedics’ shares were up 10 percent at $4.75 in premarket trading on Friday.

Shares of Seattle Genetics, which forecast full-year revenue below estimates on Thursday, were down 6 percent at $59 in light trading.

Immunomedics’ drug, IMMU-132, is currently in an early stage study in patients with advanced breast cancer, and the results are expected to serve as the basis for a marketing application under the U.S. Food and Drug Administration’s accelerated approval regulations, Seattle Genetics said.

The agreement also provides for development of additional indications for IMMU-132, including urothelial cancer, small-cell lung cancer and non-small cell lung cancer, which are currently in mid-stage studies, Immunomedics said.

Immunomedics, which in October engaged Greenhill Co to serve as a strategic adviser to assist in licensing out IMMU-132, will receive $250 million in upfront cash payment.

The company will retain the right to co-promote the drug in the United States and also receive double-digit tiered royalties on global net sales.

Seattle Genetics, which already sells cancer drug Adcetris, will also get a 2.8 percent stake in Immunomedics, with a right to raise it to 9.9 percent through its purchase of three-year warrants.

For Seattle Genetics, the deal comes more than a month after the FDA imposed a clinical hold on several early-stage studies testing the company’s experimental cancer drug following the deaths of four people in the trials.

(Reporting by Divya Grover in Bengaluru; Editing by Sriraj Kalluvila)