Seagen, the largest biotechnology company based in Seattle, has agreed to pay at least $50 million for rights to a small drugmaker’s experimental cancer medicine.
The deal, announced Monday, gives Seagen an exclusive license to develop, manufacture and commercialize Lava Therapeutics’ LAVA-1223. The medicine, which is currently in preclinical testing, is designed to target solid tumors that express EGFR, or epidermal growth factor receptor, a protein well known for its ties to cancer.
Terms of the agreement include a $50 million upfront payment to Lava. The Netherlands-based biotech could also take home around $650 million more, should the LAVA-1223 program hit certain milestones. Lava would be eligible for royalties on future sales, too, if the drug ultimately comes to market.
Lava’s work revolves around gamma delta T cells, a subset of the immune defenders known as T cells that protect against potential threats like cancer. The company is attempting to create new, so-called bispecific antibody drugs that can link these T cells to malignant ones, thereby spurring an immune response.
In 2018, two years after its founding, Lava landed its first major institutional financing, raising 16 million euros through a round led by Gilde Healthcare and Versant Ventures. By the end of 2020, Lava had entered into a research and licensing agreement with the Janssen arm of Johnson & Johnson, and raised another $83 million through a Series C financing round.
The company then went public in March 2021, securing about $89 million after deducting discounts for the banks underwriting the offering as well as other costs. Lava now lists six programs in its pipeline, with the most advanced targeting tumors that express a protein called CD1d. That program, named LAVA-051, entered human testing about a year ago, where it’s being evaluated across multiple hard-to-treat blood cancers.
For Seagen, which has grown into a major player in cancer drugmaking, the deal for LAVA-1223 provides diversification.
Historically, Seagen’s focus has been on a different type of technology known as antibody-drug conjugates. Three of its four marketed medicines – Adcetris, Padcev and Tivdak – are ADCs.
Yet the Lava agreement “represents the company’s entry into a novel class of therapeutics that are designed to overcome the challenges of standard T cell engagers,” said Roger Dansey, Seagen’s chief medical officer and interim CEO, in a statement.
Lava’s share value nearly doubled Monday morning, to trade at roughly $5 apiece.
The price of Seagen shares, meanwhile, went mostly unmoved, hovering around $140.
Seagen’s share price has fallen throughout much of August and September after breaking $180 in the early summer, when The Wall Street Journal reported that the company was in advanced talks to be acquired by Merck & Co.