Analysts Reiterate Outperform Ratings and Hike Price Targets on Seattle Genetics Inc. Following Collaboration with Merck

Javier Frausto & Jacques Potts

As we reported on yesterday, Seattle Genetics, Inc. (SGEN) and Merck (MRK) announced two new oncology collaborations.

The collaboration includes the global development and commercialization of ladiratuzumab vedotin, Seattle Genetics’ antibody-drug conjugate (ADC) which targets LIV-1. This is currently in phase 2 of clinical trials that targets some tumors and breast cancer.

In addition, Seattle Genetics has given Merck the opportunity to commercialize TUKYSA (tucatinib), a tyrosine kinase inhibitor, that works to treat HER2-positive cancers. The exclusive license will be used in Latin America, the Middle East, and Asia. This collaboration adds upside to Seattle Genetics by expanding the commercialization of Tukysa to areas outside of North America/EU while also adding external validation to ladiratuzumab vedotin.

Following this news, Monday morning, RBC Capital Markets raised the firm’s price target of Seattle Genetics Inc. (SGEN) to $191 from $175, reiterating their Outperform rating on the stock. The analysts noted that they see the ladiratuzumab vedotin deal as "particularly favorable" given the combination with Merck's Keytruda.

SVB LEERINK is also optimistic on the company’s outlook, raising their price target on Tuesday morning to $185 (from $173) while reiterating an Outperform rating on the shares and commenting that “the milestone payments and cost sharing from this deal, as well as the royalty streams and milestones expected from recently approved Polivy (Roche) and Blenrep (GSK, covered by Geoffrey Porges, OP), bring the company one step closer to sustained profitability, where we believe the company is likely to be considered for addition to the S&P 500 index, which would generate significant demand for SGEN shares. In our model, the company attains sustained profitability in 2021.”

Also mentioned by Jim Cramer and the ActionAlertsPLUS team on Monday: “Looking ahead, we look forward to Seattle Genetics upcoming presentations at the European Society of Medical Oncology (ESMO) Virtual Congress (September 19 - 21). This conference could serve as the next catalyst event for the company as management will present additional data on tisotumab vedotin and provide updates to Padcev and Tuksya.”

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Disclosure: At the time of publication, we have no positions in any of the securities mentioned in this article. We wrote this article ourselves, and it expresses our own opinions. We are not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.

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