Seagen, the largest Seattle-based biotechnology company, has agreed to pay at least $50 million for the rights to a small drugmaker’s experimental cancer drug.
The agreement, announced Monday, gives Seagen an exclusive license to develop, manufacture and commercialize Lava Therapeutics’ LAVA-1223. The drug, which is currently in preclinical testing, is said to target solid tumors that express EGFR, or the epidermal growth factor receptor, a protein known for its links to cancer.
The agreement includes a US$50 million upfront payment to Lava. The Netherlands-based biotech could also take home about $650 million more if the LAVA-1223 program hits certain milestones. Lava would also be eligible for royalties on future sales when the drug eventually hits the market.
Lava’s work revolves around gamma-delta T cells, a subset of immune defenders known as T cells that protect against potential threats like cancer. The company is trying to develop new, so-called bispecific antibody drugs, which can connect these T cells with malignant ones and thus stimulate an immune response.
In 2018, two years after its inception, Lava received its first major institutional funding, raising €16 million through a round led by Gilde Healthcare and Versant Ventures. By the end of 2020, Lava had entered into a research and license agreement with the Janssen arm of Johnson & Johnson and had raised an additional $83 million through a Series C funding round.
The company then went public in March 2021, raising approximately $89 million after deducting rebates for the banks underwriting the offering and other costs. Lava now lists six programs in its pipeline, the most advanced of which target tumors that express a protein called CD1d. This program, called LAVA-051, entered human testing about a year ago, where it is being evaluated for several difficult-to-treat blood cancers.
For Seagen, which has become a major player in the manufacture of cancer drugs, the LAVA-1223 deal offers diversification.
In the past, Seagen’s focus has been on a different type of technology known as antibody-drug conjugates. Three of the four marketed drugs — Adcetris, Padcev, and Tivdak — are ADCs.
Nonetheless, “the Lava agreement represents the company’s entry into a new class of therapeutics designed to overcome the challenges presented by standard T-cell engagers,” said Roger Dansey, Seagen’s chief medical officer and interim CEO , in a statement.
Lava’s stock has nearly doubled as of Monday morning, trading at about $5 a share.
Seagen stock price, meanwhile, remained largely flat, hovering around $140.
Seagen’s stock price fell for most of August and September, after surpassing $180 in early summer when the Wall Street Journal reported that the company was in advanced talks to be acquired by Merck & Co.