Seattle kills off $2B Immunomedics deal as biotech’s CEO and founder axed

Immunomedics saw its shares tick up early this morning on the news.

Seattle Genetics has terminated a major drug tie-up with Immunomedics after intense legal battles, as Immunomedics revealed that it has axed its president and CEO Cynthia Sullivan. 

This all goes back to February, when Immunomedics signed a potential $2 billion development and licensing deal with Seattle Genetics for IMMU-132, including a hefty $250 million upfront, only to have it placed on hold in March after a shareholder revolt.

Disgruntled investors—led by activist investor venBio—eventually forced through changes to the biotech’s board of directors.

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The acrimonious battle centers on IMMU-132, a.k.a. sacituzumab govitecan, with venBio pushing to keep the drug in-house and calling the Seattle Genetics agreement “a rushed deal that does not deliver fair value to shareholders.”

“The Immunomedics transaction would have effectively utilized our substantial expertise in antibody-drug conjugate (ADC) development to advance IMMU-132 for patients in need,” Clay Siegall, Ph.D., president and CEO of Seattle Genetics, said this morning.

“However, due to significant delays and lack of progress towards closing the deal, we are turning our full attention and resources to our promising pipeline and the substantial opportunities in front of us, including the upcoming topline data readout from the ADCETRIS ECHELON-1 trial and ongoing or planned pivotal trials of vadastuximab talirine (SGN-CD33A) and enfortumab vedotin (ASG-22ME).”

As part of this killing-off, Seattle Genetics will continue to hold 3 million shares of Immunomedics common stock, as well as a warrant to purchase an additional 8.7 million shares at $4.90 per share.

But then, about half an hour after the deal was cut, so too was Immunomedics’ leader Sullivan, who according to a separate statement: “will be stepping down from all director and officer positions with the company, including her role as president and chief executive officer.”

Michael Garone, the current CFO of Immunomedics, becomes interim CEO as a search starts for a new full-time head.

The ax also swung on David Goldenberg, the biotech’s founder, who is “stepping down from all officer positions with the company, including as chief scientific officer and chief patent officer.” He will, however, continue to serve as a director on Immunomedics’ board.

“It has been a pleasure to lead Immunomedics to this pivotal stage in its growth,” said Sullivan in a brief statement. “I am confident that the board and leadership team will continue the work of bringing IMMU-132 to patients as soon as possible.”

And there's more: After a board review, the company will now be delaying submission for its IMMU-132 BLA for approval in metastatic triple-negative breast cancer (mTNBC) "between late fourth quarter 2017 and first quarter 2018," although details were not shared as to why. 

It did say, however, that "This review [from the board] has furthermore led to detailed filing and manufacturing plans. Alongside the immediate focus on preparations for a BLA filing, the company will proceed with the final selection of a CRO to launch the confirmatory phase 3 study with the expectation of first patient enrolled in late Q3 2017, as well as executing on a manufacturing plan to build commercial inventory in preparation for a potential launch in the U.S. in 2018."

The updates do not stop there, as the company has also made a $125 million private placement to “support the development of IMMU-132, including the goal of filing a BLA for Accelerated Approval from the FDA.”

As of March 31, 2017, cash and cash equivalents were $46 million for the biotech, but it says this, combined with its new capital, should see “sufficient operating funds through the third quarter of 2018.”

Under the original deal, Seattle said it would pay $250 million upfront for the rights to Immunomedics’ solid tumor asset IMMU-132, although this could have grown to $2 billion, and would have put the biotech in charge of filing for accelerated FDA approval of IMMU-132 in metastatic triple-negative breast cancer, while also advancing the drug in other indications.

The med is an antibody-drug conjugate of SN-38—the active metabolite of the chemotherapy drug irinotecan—and Immunomedics’ anti-TROP2 asset hRS7. The ADC is designed to target the TROP-2 receptors that are found in certain tumors and hustle the payload into cells.

Immunomedics was up slightly premarket on the deal termination news, by 1.3%, but then jumped by 18% after the exec culling was announced. 

Editor's note: This story was updated after news broke that Immunomedics had made cuts to its management team.