Immunomedics, Inc. (Nasdaq: IMMU) Deal with Seattle Genetics Hits Snag

Immunomedics Inc. (Nasdaq: IMMU)

The deal between Immunomedics, Inc. (Nasdaq:IMMU) and Seattle Genetics has been put on hold for 30 days. Shares rocketed when the deal was announced and, curiously, are now rocketing now that they deal is on hold.

History

Immunomedics, Inc. (Nasdaq:IMMU) gapped up on the open on February 10, 2017 to $4.64 and hit a high of $5.89 on news that it has entered an exclusive global licensing agreement with Seattle Genetics, Inc. (Nasdaq: SGEN). Seattle Genetics is an innovative global biotechnology company that develops and commercializes novel antibody-drug conjugates (ADCs) for the treatment of cancer. Under the agreement, Seattle Genetics will develop, fund, manufacture and commercialize IMMU-132, Immunomedics’ proprietary solid tumor therapy candidate. IMMU closed that day’s trading with over a 20% gain.

Despite the positive reaction from the market, Immunomedics, Inc. (Nasdaq: IMMU) largest shareholders, venBio Delect Advisor LLC, released a strongly worded press release criticizing the deal:

“Immunomedics’ announcement of a deal with Seattle Genetics is a blatant and shameful maneuver by the current Board and management to manipulate the outcome of the upcoming Annual Meeting and entrench themselves at the expense of stockholders’ best interests, and venBio is exploring all options to hold them accountable. The current Board’s attempt to claim that the timing of this partnership – four business days before the Annual Meeting – is coincidental and was motivated purely by a desire to identify the best deal is preposterous and clearly disingenuous, in our view, especially when they have agreed to an aberrantly short six business day go-shop period.”

The press release from New York, NY-based venBio continued: “The bottom line is that what the current Board says cannot be trusted, and their credibility with stockholders has long ago been squandered. The fact that all three proxy advisory firms – ISS, Glass Lewis, and Egan Jones – recommended for our full slate of four nominees, as well as the market’s unenthusiastic reaction to this deal, further demonstrates that this is the case.”

Update

On March 3, 2017 venBio LLC announced that based on the preliminary report provided by its proxy solicitor, Immunomedics, Inc. (Nasdaq: IMMU) stockholders have overwhelmingly elected all four of venBio’s independent, highly-qualified nominees – Scott Canute, Peter Barton Hutt, Dr. Khalid Islam, and Dr. Behzad Aghazadeh – to the Company’s Board at the twice-delayed 2016 Annual Meeting of Stockholders.

Today, shares of Immunomedics, Inc. (Nasdaq: IMMU) have gained over 15% on news that a lawsuit filed by venBio LLC asking a Deleware judge to halt the deal with Seattle Genetics has been successful.

A spokeperson for Seattle Genetics commented “We can confirm that the Delaware Chancery Court issued a temporary restraining order delaying the closing of the IMMU-132 licensing deal between Seattle Genetics and Immunomedics for 30 days.”

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

Author: Steve Clark

Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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