Seattle Genetics shares surge amid antibody deal flurry

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Shares in Seattle Genetics have surged 29% in the last two weeks amid a flurry of deals being struck by companies involved in antibodies.

The US biotech is focused on the development of monoclonal antibody-based therapeutic products, and specialises in three technologies: genetically engineered monoclonal antibodies, monoclonal antibody-drug conjugates (ADCs), and antibody-directed enzyme prodrug therapy.

Seattle announced a deal with Genentech in August for the humanised monoclonal antibody SGN-40, which will shortly enter five clinical trials, in combination with Rituxan and ICE chemotherapy, for lymphoma subtypes and multiple myeloma. The deal, under which Seattle received $60m upfront and could potentially get $800m in milestones, pleased investors and initiated a two month rally in the stock.

However, the shares began drifting downwards in October, before the sudden surge seen in the last two weeks. The stock closed at $13.13 yesterday, for a 146% gain this year, valuing the company at $884m.

The acquisition of Agensys by Astellas for $387m, announced on Nov 27, the alliance between Regeneron Pharmaceuticals and Sanofi-Aventis revealed two days later, and the tie up between MorphoSys and Novartis, completed on Monday, has refocused attention on the antibody sector.

“The antibody space has become interesting therapeutically, and from a merger and acquisition point of view, and there’s a scarcity factor” comments Mark Monane, an analyst at Needham.

Further catalysts

As well as the Genentech deal and the interest in the space generally, Mr Monane said that Seattle shares have also been climbing ahead of data due to be released at the American Society of Hematology meeting next week. In anticipation of good results and continuing interest in the company, the analyst raised his price target on the stock to $15 from $12 last month.

Data involving SGN-33 will be presented on Monday, from phase I studies in acute myeloid leukaemia (AML) or myelodysplastic syndromes (MDS). The human monoclonal antibody was in-licensed from PDL BioPharma.

Seattle is seeking potential ex-U.S. partnerships for SGN-33 along the terms of either retaining U.S. rights and handing over ex-US rights, or co-development rights in the U.S. with the partner funding development elsewhere.

Thus positive results will be seen as bonus for this process. Shareholders, which saw Seattle stock touch an all-time high of $13.44 yesterday, could see that record broken again if interest in the sector and encouraging news from the company continues.

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