Seattle Genetics (NASDAQ:SGEN) is best known for its one successful marketed cancer drug, but it has been busy working behind the scenes for years on new technologies for making souped-up antibodies against cancer. Now AbbVie (NYSE:ABBV) has agreed to pay $25 million to gain more access to some of the new technology that links targeted antibodies to potent toxins.
Seattle Genetics said today it has gotten an upfront $25 million payment from North Chicago, IL-based AbbVie, the company that markets the blockbuster arthritis drug adalimumab (Humira). The deal allows AbbVie to use the Seattle Genetics's PBD dimer technology for linking a new kind of toxin to targeted antibodies, with an ability to place the toxins at precise locations on the large Y-shaped antibodies. Scientists believe the "site-specific" binding technique may provide an advantage with manufacturing consistency and a more consistent effect against tumors.
The deal is structured to allow AbbVie to work on souped-up antibodies against an undisclosed number of biological targets for cancer drugs. Seattle Genetics will be eligible for as much as $255 million in license fees and milestone payments per target, if the AbbVie drugs reach certain development and commercial goals. If any of the drug candidates reach the market, Seattle Genetics would collect a "mid-to-high" single digit percentage royalty on each product.
AbbVie has shown increasing interest in antibody-drug conjugate technology over the years, starting when it agreed to pay $8 million upfront to Seattle Genetics in 2011. AbbVie agreed to expand the deal with a $25 million payment a year later, and has now expanded it again.
Seattle Genetics has made its name in the biotech business the past couple years with brentuximab vedotin (Adcetris). It's the first commercially successful example of a drug that combines the precise targeting capability of an antibody with a toxin that provides an extra wallop to tumors. The success was followed by the FDA approval last year of Genentech's trastuzumab emtansine (Kadcyla), which is essentially a supercharged version of its original "naked" antibody marketed as Herceptin. A wide range of competitors, at large companies and small ones, have since sought to one-up that achievement. Some are experimenting with different kinds of toxins, different linkers, or with antibody-binding technologies that provide "site-specific" conjugation, so the same number of toxins get attached to the antibody every time, and they get attached to the same spot.
Seattle Genetics stock climbed 2.7 percent today, to reach $41.07 a share at 10:44 am ET. That means the company now has a market valuation of just over $5 billion.
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