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Merck (NYSE:MRK) Makes Investment In Seattle Genetics Inc. (NASDAQ:SGEN) For Development Of Ladiratuzumab Vedotin

Merck (NYSE:MRK) has entered a development agreement for Seattle Genetics Inc. (NASDAQ:SGEN) ladiratuzimab vedotin antibody-drug conjugate (ADC).

Merck joins Gilead in investing in ADC-developer with a stake in Seattle Genetics

The agreement came hours after Gilead Sciences Inc. (NYSE:GILD) announced the acquisition of Immunomedics for $21 billion. The centerpiece of Gilead’s deal is Immunomedic’s anti-Trop-2 ADC, Trodelvy that is currently under FDA review as a third-line metastatic TNBC treatment. Merck’s deal will see it make a $1 billion investment to acquire 5 million common shares of Seattle Genetics and a $600 million upfront payment to co-develop ladiratuzumab vedotin.

Some years back, Seattle Genetics and Immunomedics were in a joint partnership developing ADCsbut the partnership became ugly, resulting in a split. Following the split, Immunomedics turned out to grab the big cash buyout deal with Seattle Genetics settling for a smaller biobucks deal with Merck.

For Seattle Genetics the biobucks deal is a huge win after severing ties with Immunomedics considering Merck doesn’t make heavy biobucks. Their investigational ADC, ladiratuzumab vedotin has been designed to deliver microtubule-disrupting agents to LIV-1 expressing cells. LIV-1 is upregulated in TNBC, and its expression is usually maintained following hormonal therapy; and the company identified the transporter as a way of targeting tumor cells. The ADC releases a payload once in the cell resulting in cell cycle apoptosis and arrest.

Merk commits $2.6 billion in development efforts of ladiratuzumab vedotin

Seattle Genetics and Merck evaluate the possible impact of combining ladiratuzumab vedotin with Merck’s KEYTRUD® in Phase 1/2 breast cancer study. After seeing the study’s preliminary efficacy data, Merck decided to take a lead role in the program. Merck has committed around $2.6 billion in the deal, and its willingness to commit such large sums is a reflection that besides the potential of killing cancer, ladiratuzumab vedotin could create a suitable micro setting for KEYTRUDA.

The company expects that since ADC causes cell death, it will make KEYTRUDA effective, thus enhancing the infiltration of activated NK and T cells. Most responses were partial, but more data from the trial is expected.

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