Under the terms of the deal, Merck is paying Seattle Genetics $600 million up front and a $1.0 billion equity investment in 5 million shares of Seattle Genetics common stock at a price of $200 per share.
Seattle Genetics Inc. and Merck, known as MSD outside the United States and Canada, have announced two new strategic oncology collaborations.
Seattle Genetics and Immunomedics once worked closely together on cancer treatments, but the $2 billion collaboration ended abruptly in 2017 after a messy split.
"Collaborating with Merck on ladiratuzumab vedotin will allow us to accelerate and broaden its development programme in breast cancer and other solid tumours, including in combination with Merck's Keytruda, while also positioning us to leverage our USA and European commercial operations", said Clay Siegall, President and Chief Executive Officer of Seattle Genetics.
The companies added they would co-develop and sell Seattle Genetics's cancer therapy, ladiratuzumab vedotin.
In a separate agreement on Tukysa, the collaboration will allow Seattle Genetics to benefit from the commercial strength of Merck and expand the small-molecule drug globally. On top of that, Seattle is also eligible to progress-dependent milestone payments of up to $2.6bn related to the ladiratuzumab vedotin clinical programme. Seattle Genetics employs about 1,800, and boasts a market value of $29 billion.
Merck has been granted exclusive rights to commercialize TUKYSA in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe.
For the Tukysa deal, Merck will handle marketing applications for the drug in its territories, based on positive data from the HER2CLIMB clinical trial.
In addition to the commercialisation agreement, Merck will also co-fund a portion of the Tukysa global development plan, which includes several ongoing and planned trials across HER2-positive cancers.
Last month, Cowen analyst Boris Peaker raised his price target for Seattle Genetics to $169 from $163 after the company reported strong revenue for Padcev and Tukysa, while Adcetris revenue fell short of consensus.
Seattle Genetics will receive from Merck $125 million as an upfront payment and is eligible to receive progress-dependent milestones of up to $65 million.
The first drug covered in the deal, investigational antibody-drug conjugate (ADC) targeting LIV-1 ladiratuzumab vedotin, will be jointly developed and commercialised by Merck and Seattle Genetics.
Merck will own about 2.9 percent of Seattle Genetics once the deal concludes, The Wall Street Journal reports.