Merck to acquire $1bn equity stake in Seattle Genetics; announces two oncology collaborations

Seattle Genetics, Inc. is a global biotechnology company working on cancer medicines. The company is headquartered in the Seattle, Washington area; with locations in Switzerland, California and the EU.

It says the collaboration with Merck on ladiratuzumab vedotin will allow it to accelerate and broaden its development program in breast cancer and other solid tumors, including in combination with Merck’s Keytruda.

In a separate agreement on Tukysa, the collaboration will allow Seattle Genetics to benefit from the commercial strength of Merck and expand the small-molecule drug globally.

Ladiratuzumab Vedotin​

Seattle Genetics’ ladiratuzumab vedotin, an investigational antibody-drug conjugate (ADC) targeting LIV-1, is currently in phase 2 clinical trials for breast cancer and other solid tumors.

Under today’s agreement, Merck and Seattle Genetics will develop and commercialize the ADC globally. They will jointly develop and share future costs and profits on a 50:50 basis. 

The two companies will evaluate ladiratuzumab vedotin both as monotherapy and in combination with Merck’s anti-PD-1 therapy Keytruda ​(pembrolizumab) in triple-negative breast cancer, hormone receptor-positive breast cancer and other LIV-1-expressing solid tumors.

Seattle Genetics will receive a $600m upfront payment and Merck will make a $1bn equity investment in 5 million shares of Seattle Genetics common stock at $200 per share. Seattle Genetics is also eligible for progress-dependent milestone payments of up to $2.6bn.

Expanding TUKYSA globally​

A second, separate collaboration will see the two companies enter a co-development agreement to extend the reach of Tukysa for HER2-Positive Cancers outside of the US, Canada and Europe.

Seattle Genetics is granting Merck an exclusive license to commercialize Tukysa (tucatinib) - a small molecule tyrosine kinase inhibitor, for the treatment of HER2-positive cancers - in Asia, the Middle East and Latin America and other regions outside of the US, Canada and Europe.

Seattle Genetics will receive $125m from Merck as an upfront payment and is eligible for progress-dependent milestones of up to $65m. Seattle Genetics will also receive $85m in prepaid research and development payments to be applied to Merck’s global development funding obligations. Seattle Genetics would receive tiered royalties on sales of Tukysa in Merck’s territory.

Tukysa is an oral tyrosine kinase inhibitor (TKI) of HER2, a protein that contributes to cancer cell growth. In April, Tukysa in combination with trastuzumab and capecitabine was approved by the U.S. Food and Drug Administration (FDA) for adult patients with advanced unresectable or metastatic HER2-positive breast cancer, including patients with brain metastases, who have received one or more prior anti-HER2-based regimens in the metastatic setting.

Tukysa has also received approval in Canada, Singapore, Australia and Switzerland under the Project Orbis initiative of the FDA Oncology Center of Excellence that provides a framework for concurrent submission and review of oncology products among international partners. A marketing application is under review in the European Union.

Tukysa is being evaluated in several ongoing clinical trials, including two phase 3 trials:

• HER2CLIMB-02​: a randomized, double-blind phase 3 trial evaluating TUKYSA in combination with T-DM1 (trastuzumab emtansine; Kadcyla) versus T-DM1 in first- and second-line metastatic HER2-positive breast cancer.
• CompassHER2 RD​: a randomized, double-blind phase 3 trial of TUKYSA in combination with T-DM1 versus T-DM1 in the adjuvant breast cancer setting for patients at high risk of relapse.