A vitriolic proxy battle for control of a New Jersey company that Seattle Genetics made a big deal with in February has now put their transaction on ice for at least a month.

Share story

A vitriolic proxy battle for control of a New Jersey company that Seattle Genetics made a big deal with in February has now put their transaction on ice for at least a month.

Seattle Genetics agreed last month to pay $250 million upfront to license a potential solid-tumor drug developed by Immunomedics, a small biotech company in Morris Plains, New Jersey. Future milestone and royalty payments could push the total to $2 billion, the companies said.

But a proxy challenge to the board members running Immunomedics has thrown a wrench into that plan: A Delaware judge Thursday issued a temporary restraining order preventing Seattle Genetics from closing the deal.

“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,” a spokeswoman for Seattle Genetics said in an email.

The judge’s ruling is not yet available, but a court document filed Thursday said the temporary restraining order was “granted in part.”

VenBio, the largest Immunomedics shareholder with 9.9 percent of the stock, seeks to oust four controlling board members amid claims the 35-year-old company is mismanaged by the founder, who is its chief scientific officer, and his wife, who is president and CEO.

The activist investor fund portrays Immunomedics’ Seattle Genetics deal as a “Hail Mary attempt to maintain control” and short-circuit an orderly bidding process that could have yielded a better deal.

VenBio says its slate of candidates for the board was endorsed by the three leading proxy advisory firms — ISS, Glass Lewis and Egan Jones — and asserts that before the March 3 shareholder meeting it was receiving a majority of stockholder votes.

Nearly a week after that meeting, Immunomedics has not announced the results.

A day before the shareholder meeting, in a separate federal court suit filed by Immunomedics seeking to invalidate VenBio’s proxy votes, a judge declined to grant the company a temporary restraining order. That suit claimed VenBio has engaged in “baseless character assassinations” and violated laws governing proxy contests.

Until the litigation in both courts is resolved, it’s unlikely Seattle Genetics can complete its deal and move forward with the planned Phase 3 clinical trials for the drug in metastatic triple-negative breast cancer.