Activist investor moves to block Immunomedics deal

Dive Brief:

  • Activist investor VenBio, the largest shareholder of New Jersey biotech Immunomedics, is attempting to block a recently brokered licensing deal between Immunomedics and Seattle Genetics that would give Seattle Genetics global rights to Immunomedics' cancer drug candidate IMMU-132. 
  • The investment manager has filed for an injunction to prevent Immunomedics from closing the deal or further delaying an upcoming shareholder vote at the company's annual meeting. VenBio had previously proposed new nominees to replace the current directors of the board.
  • VenBio believes the deal undervalues IMMU-132 and sees it as part of an effort by the current Immunomedics board to secure shareholder support. The vote was originally scheduled for Feb. 16 but Immunomedics postponed it until Mar. 3 — after the deal with Seattle Genetics would close.

Dive Insight:

Things are getting nasty in the biotech M&A world — the Immunomedics and Seattle Genetics deal, announced earlier this month, has triggered a spat with Immunomedics' largest shareholder VenBio Select Advisor.

VenBio has accused Immunomedics' directors and management of undervaluing what it sees as Immunomedics' "crown jewel," the antibody drug conjugate IMMU-132, in a bold attempt to retain shareholder support ahead of the upcoming annual meeting vote. 

Immunomedics, though, is firing back. The biotech accused VenBio's efforts of being self-serving and self-interested, and emphasized the planned deal with Seattle Genetics would deliver shareholder value.

"This lawsuit appears to be a desperate act designed to prop up VenBio’s attempt to take control of Immunomedics and implement its own self-serving agenda, at the expense of other stockholders," Immunomedics said in a letter to shareholders.

Over half of the 80% of Immunomedics outstanding shares already submitted for the vote are in favor of VenBio's board nominees, the investment manager said. With the vote now scheduled to take place after the deal with Seattle Genetics would close, any newly elected board nominees wouldn't have a chance to review deal terms — hence, the legal action to delay completion.

"We believe the deal Immunomedics’ current Board and management announced only four business days before the Annual Meeting vote was motivated by a desire to entrench themselves and rush to announce an agreement before they lost the vote and their Board seats," said Behzad Aghazadeh, managing partner and portfolio manager at VenBio

Under the current deal terms, Immunomedics would receive $250 million upfront, with another $1.7 billion in potential milestone payments. Seattle Genetics also plans to invest $15 million in Immunomedics stock, and would secure an option to purchase another 8.7 million shares at $4.90 per share. 

In return, Seattle Genetics would snag exclusive worldwide rights to IMMU-132. The drug has a breakthrough designation from the Food and Drug Administration and Immunomedics expects to submit a biologics license application for solid tumors at the end of the ongoing Phase 1/2 trial.

Immunomedics shares had soared 22% on the news of the deal, but are currently trading flat, closing last night at $5.17. 

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Filed Under: Mergers and Acquisitions / Deals Legal