The activist investment group venBio has brought down a high profile, $2 billion collaboration deal — with $300 million in up front cash — between Seattle Genetics and Immunomedics. And the peace agreement they signed is tied to the resignations of the CEO and CSO at Immunomedics, who led the counterattack against venBio, which now has total control of the biotech.
A few months ago the two companies tied up in a deal that gave Seattle Genetics global rights to Immunomedics’ IMMU-132, putting them in charge of a late-stage study of the drug for metastatic triple negative breast cancer while looking for an accelerated approval.
But venBio fought back, hard, saying the option deal gave Seattle Genetics the right to acquire a big chunk of Immunomedics’ stock at a deep discount, destroying shareholders value in a “blatant and shameful maneuver by the current Board and management to… entrench themselves at the expense of stockholders’ best interests.” And the group targeted CEO Cynthia Sullivan along with her husband and Immunomedics chief scientific officer David Goldenberg for enriching themselves at the expense of investors.
In early March, venBio won board seats for four of their candidates, and with the deal yet to close, promised a thorough review. They sought an injunction to pause the deal, and today Seattle Genetics is throwing in the towel and walking away. The warring parties agreed to settle their dispute, while Seattle Genetics holds on to 3 million shares of Immunomedics common stock and a warrant to purchase an additional 8.7 million shares at $4.90 per share exercisable until the end of this year.
Sullivan and Goldenberg have both agreed to resign from their positions at the company, according to an 8-K filed today. And they will get $3.4 million and $3.6 million respectively, as outlined in their employment agreements. Goldenberg remains on the board. And venBio will get reimbursed by the company for its legal fees in the battle. CFO Michael R. Garone has been named as the interim CEO until they find a permanent replacement for the post.
Investors seem to like the way this has turned out, bidding up Immunomedics’ shares by 20%. But Seattle Genetics CEO Clay Siegall didn’t sound happy in his goodbye note.
“The Immunomedics transaction would have effectively utilized our substantial expertise in antibody-drug conjugate (ADC) development to advance IMMU-132 for patients in need,” said Siegall in a statement. “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).”
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