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Activists torpedo Immunomedics deal with Seattle Genetics

venBio says deal will enrich CEO at shareholders' expense

ImmunomedicsImmunomedics $2bn deal licensing its triple-negative breast cancer (TNBC) candidate IMMU-132 to Seattle Genetics has been abandoned due to an investor revolt.

In the face of a legal challenge launched by activist investor group venBio, Immunomedics has now said it will abandon the licensing deal agreed in February - which included a $250m upfront payment - and take development of IMMU-132 (sacituzumab govitecan) forward on its own.

Immunomedics now thinks that it will be able to apply for accelerated FDA approval of IMMU-132 in metastatic TNBC at the end of this year or early in 2018, based on the an ongoing phase II study of the drug as a third-line treatment. It plans to start a phase III trial in the third quarter, which will be used to support full approval.

The pressure from venBio - which now has control of Immunomedics' board - has also claimed the scalps of Immunomedics' chief executive Cynthia Sullivan as well as the founder of the company, David Goldenberg, who had also held senior positions at the firm including as chief scientific officer.

venBio reacted strongly after the Seattle Genetics deal was announced, arguing that it was essentially a deal designed to enrich Sullivan and her husband Goldenberg at the expense of long-suffering Immunomedics shareholders - pointing out that the company has failed to bring any products to market in its 35-year history.

In March the activists - led by managing partner Behzad Aghazadeh who is now chairman of the biotech - managed to get four members elected to Immunomedics' board and immediately sought an injunction on the Seattle Genetics deal. Now, its would-be partner has decided to duck out of the messy business although it retains a stake in Immunomedics.

Sullivan and Goldenberg have both agreed to resign - bagging $3.4m and $3.6m respectively in severance payments - although Goldenberg will retain a seat on the board. Immunomedics' current chief financial officer Michael Garone will take over as interim CEO after Sullivan steps down and while the board seeks a permanent CEO.

The settlement also reimburses venBio for legal expenses accrued while the action was being fought.

"After conducting a full multi-faceted review of the organisational, operational, and clinical and regulatory capabilities, we are confident that Immunomedics can fully execute on a strategic plan over the next several years to become a recognised leader in the field of antibody-drug conjugates," said Aghazadeh.

Investors seemed to respond positively to the news, with Immunomedics' share price leaping after the details were announced to approach its 52-week high.

Article by
Phil Taylor

9th May 2017

From: Sales

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