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(Reuters) - Drug developer Immunomedics Inc said on Friday it entered into a development and licensing deal worth up to $2 billion for its experimental cancer drug with Seattle Genetics Inc.
Immunomedics' shares rose as much as 33 percent to a more than 3-year high of $5.72 in early morning trading.
Shares of Seattle Genetics, which forecast full-year revenue below estimates on Thursday, were down 4.2 percent at $60.17.
Immunomedics, which in October engaged Greenhill & Co to assist in licensing out the drug, IMMU-132, will receive $250 million in upfront cash payment.
The drug is currently in an early stage study in advanced breast cancer patients whose disease has progressed despite multiple therapies, and has won the U.S. Food and Drug Administration's "breakthrough status," granting it an expedited path toward approval.
The results of the trial are expected to serve as the basis for a marketing application under the FDA's accelerated approval regulations, Seattle Genetics said.
Seattle Genetics, which already has an approved cancer drug Adcetris, will take charge of the IMMU-132 application and the confirmatory late-stage trial, assuming the drug wins approval.
Seattle Genetics Chief Executive Clay Siegall on a call with analysts declined to provide a timeline for the drug's approval path, but said he would be able to disclose such detail in the "not so distant future", if and when the deal closes.
For Seattle Genetics, the deal comes more than a month after the FDA imposed a clinical hold on several early-stage studies testing the company's experimental cancer drug following the deaths of four people in the trials.
IMMU-132 is also being evaluated for a wide range of solid tumor cancers, including those of the lung and pancreas, and the deal allows for the development of the drug in these indications as well.
Even if the deal is not closed, Seattle will retain a 2.8 percent stake in Immunomedics it is buying as part of the agreement, with an option to raise it.
Seattle Genetics and Immunomedics focus on antibody-drug conjugates (ADCs), which are designed to harness the targeting ability of monoclonal antibodies and reduce the toxic impact of traditional chemotherapy.
Immunomedics will retain the right to co-promote the drug in the United States and is eligible to receive double-digit tiered royalties on global net sales.
The company can solicit rival offers through Feb. 19, as part of the deal.
Reporting by Divya Grover in Bengaluru; Editing by Sriraj Kalluvila