(Reuters) – Drugmaker Merck & Co Inc would buy $1 billion worth of equity stake in Seattle Genetics’s common stock, the companies said on Monday.
The companies added they would co-develop and sell Seattle Genetics’s cancer therapy, ladiratuzumab vedotin. (https://reut.rs/3bWTEvS)
The collaboration will assess ladiratuzumab vedotin in combination with Merck’s blockbuster drug Keytruda in types of breast cancer and other solid tumors, the companies said in a joint statement.
Seattle Genetics, a cancer-focussed drug developer, will receive an upfront payment of $600 million under the agreement, while Merck will invest the $1 billion to buy 5 million shares of Seattle Genetics for $200 per share, a premium of 33.4% to Seattle’s last close.
This would amount to a stake of nearly 2.9%, according to Refinitiv IBES data.
Shares of Seattle Genetics were up nearly 12% at $167.48 in premarket trade, while Merck shares were largely unchanged.
Merck has been trying to push deeper to expand its cancer portfolio and struck a $2.7 billion deal with ArQule Inc in December to tap into the drug developer’s experimental blood cancer therapy that targets genetic mutations.
Seattle Genetics is also eligible for additional milestone payments of up to $2.6 billion.
Separately, Seattle Genetics has also given Merck exclusive license to sell its cancer therapy Tukysa in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe.
The company will receive upfront payment of $125 million from Merck for the same, with additional milestone payments of up to $65 million.
(Reporting by Trisha Roy in Bengaluru; Editing by Rashmi Aich)
