Immunomedics, Inc. (NASDAQ:IMMU)
Shares of Immunomedics, Inc. (NASDAQ:IMMU) continue to trade higher as investors react to news the clinical-stage drug developer has terminated a pact with Seattle Genetics, Inc. (NASDAQ:SGEN). Investor’s sentiments on the stock also appear to have been bolstered by the raising of a $125 million in a private placement of convertible preferred stock.
Seattle Genetics Deal Termination
The stock soaring higher in the market comes from investors appearing confident that the company will be able to secure a better licensing deal for its lead candidate drug IMMU-132. Fuelling optimism on the same is the fact that activist investor hedge fund, VenBio has secured four board seats which put them in full control of the company.
Termination of the licensing deal comes as a surprise given that Seattle Genetics had reached an agreement that would have seen it give Immunomedics $250 million in upfront cash. The company was to take a $58 million equity investment in Immunomedics that translated to a 9.9% stake at the time.
However, with VenBio taking control of Immunomedics, Inc. (NASDAQ:IMMU), the deal had to be terminated. The investment firm felt the deal undervalued rights to the antibody drug conjugate, and company’s lead asset, IMMU-132.
All rights to the lead drug have since been returned to Immunomedics. Seattle Genetics will, however, hang on to 3 million Immunomedics shares and is also entitled to acquire an additional 8.7 million shares before the end of the year at $4.90 a share.
Preferred Stock Offering
Immunomedics, Inc. (NASDAQ:IMMU) has since confirmed plans to sell 1 million shares of preferred stock as it seeks to raise $125 million. Net proceeds from the offering are to be used to support the development of IMMU-132 as the company moves to file a Biologics License Agreement for accelerated approval with the U.S Food and Drug Administration.
While the termination of Seattle Genetics agreement was big news, it appears that Immunomedics executives stepping down may also have acted as a catalyst for the stock’s gain. Cynthia L Sullivan has stepped down as CEO and director with CFO, Michael R Garone, taking over in an interim capacity. Founder Dr. David Goldenberg has also stepped down from all current officer roles.
Wall Street remains positive about Immunomedics prospects with the expected filling of a biologic license application for the company’s lead candidate drug. New management team, as well as the fresh round of capital, continues to fuel investor optimism on the stock.
Immunomedics, Inc. (NASDAQ:IMMU)’s stock was up by 8.02% in Monday trading session ending the day at highs of $6.87 a share.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.