Merck Takes Seattle Genetics Stake, Plans Cancer-Drug Venture

Merck is buying an equity stake in Seattle Genetics and collaborating with the biopharma on two cancer drugs.
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Merck  (MRK) - Get Report said on Monday that it would take an equity stake in Seattle Genetics  (SGEN) - Get Report and collaborate with the biopharma on two cancer drugs.

The companies will globally develop and commercialize Seattle Genetics’ ladiratuzumab vedotin, an investigational antibody-drug conjugate. The product is currently in Phase II clinical trials for breast cancer and other solid tumors.

Under terms of the companies' agreement, Seattle Genetics will receive a $600 million up front payment and Merck will make a $1 billion equity investment in 5 million Seattle Genetics common shares for $200 each.

In addition, Seattle Genetics, Bothell, Wash., is eligible for milestone payments of up to $2.6 billion.

Separately, Seattle Genetics also has granted Merck, Kenilworth, N.J., an exclusive license to commercialize Tukysa, a small molecule tyrosine kinase inhibitor designed to treat HER2-positive cancers. 

The license covers Asia, the Middle East Latin America and other regions outside of the U.S., Canada and Europe. 

For this collaboration Seattle Genetics will receive $125 million from Merck up front and is eligible for milestone payments of up to $65 million.

“These two strategic collaborations will enable us to further diversify Merck’s broad oncology portfolio and pipeline,” Roger Perlmutter, president of Merck Research Laboratories, said in a statement.

Seattle Genetics shares at last check traded at $165.50, up 10%. They have climbed 10% year to date.

Merck shares recently traded at $84.16, up 0.4%. The stock gained 11% year to date through Friday, compared with 10% for the S&P 500.

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