Please ensure Javascript is enabled for purposes of website accessibility

Why Seattle Genetics Stock Jumped 24% in September

By Demitri Kalogeropoulos – Oct 7, 2020 at 9:44AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors celebrated news of a big partnership -- and a big capital infusion.

What happened

Seattle Genetics (SGEN -0.42%) shareholders outpaced a declining market in September as the stock jumped 24% compared to the S&P 500's 3.9% drop, according to data provided by S&P Global Market Intelligence.

That surge added to a broader rally for the biotech company; its shares are up by more than 70% so far in 2020.

A woman performs clinical research.

Image source: Getty Images.

So what

Early in the month, investors celebrated the news that Seattle Genetics is partnering with Merck & Co (MRK 0.64%) in two major oncology development programs. Merck will jointly develop and commercialize the biotech's breast cancer tumor treatment, and will assist it in its attempts to broaden the reach of its cancer-fighting drug, Tukysa. The two collaboration agreements included more than $700 million in upfront payments to Seattle Genetics, with the total size of the deal potentially exceeding $4 billion.

Now what

Merck has taken a 50% position in any future costs and profits for Seattle Genetics' breast cancer treatment, and has received exclusive rights to commercialize Tukysa outside of the U.S., Canada, and Europe. The company also purchased $1 billion of Seattle Genetics stock for $200 per share.

Investors pushed the stock above that level last month, an indication that they see the potential for even more value to come from this partnership in the coming years.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Seattle Genetics. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Seagen Inc. Stock Quote
Seagen Inc.
SGEN
$123.44 (-0.42%) $0.52
Merck & Co. Stock Quote
Merck & Co.
MRK
$107.50 (0.64%) $0.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.