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Seattle Genetics to Acquire Cascadian Therapeutics for $614M

“Very Positive Outcome”

“Seattle Genetics has the development and commercial capabilities and the resources needed to more fully realize the potential of tucatinib as a new best-in-class treatment option for metastatic breast cancer, colorectal cancer, and potentially for other indications,” added Scott D. Myers, Cascadian’s president and CEO. “This agreement represents a very positive outcome for patients with HER2-expressing cancers, our employees, and for our stockholders.”

Seattle Genetics plans to commence a tender offer on or about February 8 to acquire all outstanding common stock of Cascadian for $10 per share cash—a 69% premium over Cascadian’s closing price yesterday and a 139% premium to its 30-day volume-weighted average stock price.

The tender offer is subject to customary closing conditions, including the tender of at least a majority of Cascadian’s outstanding shares of common stock (on a fully diluted basis) and the expiration or early termination of the applicable waiting period under the Hart–Scott–Rodino Antitrust Improvements Act of 1976.

Following the closing of the tender offer, a wholly owned subsidiary of Seattle Genetics will merge with and into Cascadian Therapeutics, with each share of Cascadian Therapeutics common stock that was not tendered being converted into the right to receive the same $10 per share cash offered in the tender offer.

In connection with the acquisition, Seattle Genetics said it secured a $400 million financing commitment from Barclays and JPMorgan-Chase Bank, with the rest of the purchase price to be paid through cash on hand. As of September 30, 2017, Seattle Genetics had $450.4 million in cash, cash equivalents, and short-term investments set to mature within the next 12 months—of which $128.14 million was cash and cash equivalents.

Separately, Seattle Genetics announced it has begun a $550 million underwritten public offering of shares, and said it expected to grant underwriters a 30-day option to purchase up to an additional $82.5 million of shares of its common stock solely to cover over-allotments at the public offering price.

The transaction—anticipated to close in the first quarter—has been unanimously approved by the boards of both companies.

Should the deal fall through, Cascadian would have to pay Seattle Genetics a termination fee of $17 million, according to a regulatory filing. Seattle Genetics said it will instead use the net proceeds from the offering toward ongoing commercialization of its marketed cancer treatment Adcetris® (brentuximab vedotin) in the U.S. and Canada, toward R&D designed to further expand the Adcetris label, toward advancing its pipeline of product candidates, as well as for general corporate purposes, including working capital.

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