- Merck & Co. has acquired partial rights to two cancer drugs from Seattle Genetics and will make a $1 billion equity investment in the biotech as part of separate collaborations announced by the companies Monday.
- In one of the deals, Merck will pay Seattle Genetics $600 million in cash and buy 5 million of its shares at $200 apiece to co-develop ladiratuzumab vedotin, an experimental drug in Phase 2 testing in breast cancer and other solid tumors. Merck will also shell out $125 million for rights outside of the U.S., Canada and Europe to Seattle Genetics' approved breast cancer drug Tukysa.
- Merck and Seattle Genetics have already been working together to test some of their drugs alongside one another. The new agreements significantly expand Merck's bet on Seattle Genetics' antibody-drug conjugate technology, however, at a time when the drug class is advancing quickly after years of slow progress.
Antibody-drug conjugates, or ADCs, work by linking a toxic chemical to a tumor-targeting antibody. The idea has intrigued researchers for years because of the potential to more specifically target cancers while sparing healthy tissue.
Despite the technology's promise, drugmakers had little to show for their interest until a few years ago. Only three ADCs were cleared for use in the U.S. by 2016.
The pace of progress has sped up since then, boosted in part by technical advances. Since 2017, the Food and Drug Administration has approved seven more ADCs, including three last year alone.
With that progress has come significant investments by some of the world's top drugmakers. AstraZeneca, for instance, allied with Daiichi Sankyo twice since 2019 to gain access to two ADCs for breast cancer. One of them, Enhertu, was cleared for use 2019. Gilead on Sunday bought Immunomedics for $21 billion, largely for Trodelvy, an ADC for a different form of breast cancer.
Seattle Genetics is no stranger to any of this. The company, formed in 1997, is one of the industry leaders in ADC technology. Yet it took nearly 15 years for the company to bring its first ADC to market, a lymphoma drug known as Adectris. Seattle Genetics got its second ADC approval, for the bladder cancer drug Padcev, eight years later.
"We were working in this field at a time, decades ago, when nobody even wanted to talk about ADCs," CEO Clay Siegall said on a conference call Monday.
Seattle Genetics has been expanding its research, too. Another of its ADCs, partnered with Genmab, is in pivotal studies for cervical cancer. And now Merck, which has been working with the company on clinical trial collaborations since 2017, is making a notable investment in Seattle Genetics future.
Merck is interested in using Seattle Genetics' ADCs to boost the effectiveness of Keytruda, which still only helps a fraction of patients despite being the world's top-selling cancer immunotherapy. Since 2017, the two companies have struck two separate agreements to test Padcev and ladiratuzumab vedotin together with Keytruda in different cancer types.
Seattle Genetics already splits rights to Padcev with Astellas Pharma. But by paying $1.6 billion in cash and equity, Merck will now split potential future sales for ladiratuzumab vedotin. The drug targets a tumor protein called LIV-1, which is over-expressed in multiple cancers. It is in testing for two forms of breast cancer — triple-negative and hormone receptor-positive — as well as a "basket" trial for other LIV-1-expressing solid tumors.
Keytruda is currently under an FDA review for triple-negative breast cancer, a particularly aggressive and difficult to treat form of the disease. Merck hopes ADC technology can help broaden the reach of immunotherapy in breast cancer, a tumor type that has become an increasingly competitive.
"We're very confident in the data we have," Siegall said, when asked of the competition.
Siegall wouldn't say when to expect data from the ongoing studies. But Seattle Genetics could get another $2.6 billion in downstream payments tied to development and sales progress if everything breaks right. The pharma has not signed a standstill agreement with Merck, meaning it isn't prohibited from increasing its stake in Seattle Genetics, Siegall said.
Separately, Merck also acquired rights to Seattle Genetics Tukysa, a different type of breast cancer drug, in Asia, the Middle East, Latin America and some other territories. The FDA approved Tukysa in April for patients whose advanced breast cancer expresses the HER2 protein and has spread to other areas of the body, including the brain.
Seattle Genetics shares climbed about 10%, to $164.92 apiece, early Monday.