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Seattle Genetics, Inc. (SGEN - Snapshot Report) further expanded its antibody-drug conjugate (ADC) collaboration with AbbVie Inc. (ABBV - Analyst Report).

AbbVie will pay an upfront fee of $25 million for additional rights of using Seattle Genetics’ ADC technology with AbbVie antibodies against oncology targets. Seattle Genetics could receive up to $255 million from AbbVie in the form of potential license fees, royalties on worldwide net sales of any resulting products and future milestone payments on achieving predetermined development and commercial objectives.

We note that in Mar 2011, Abbott Laboratories (ABT - Analyst Report) (prior to its spin-off of AbbVie) had entered into a collaboration agreement with Seattle Genetics under which Abbott paid an upfront fee of $8 million for rights to utilize Seattle Genetics' ADC technology with its antibodies to a single oncology target. In Oct 2012, the deal was expanded and Abbott paid an additional $25 million. Seattle Genetics were to receive up to $220 million under that deal.

As per the agreement, AbbVie is responsible for research, product development, manufacturing and commercialization of ADC products. Seattle Genetics will also receive annual maintenance fees and research support payments for assistance provided to AbbVie in developing ADCs.

ADCs have lately been attracting a lot of interest with major companies entering into collaborations. 18 out of 30 ADC candidates in clinical development use Seattle Genetics’ proprietary ADC technology. Seattle Genetics has alliances with many companies for the development of ADCs.

Seattle Genetics and AbbVie carry a Zacks Rank #3 (Hold). Investors may consider WuXiPharmaTech (Cayman) Inc. (WX - Snapshot Report), which carries a Zacks Rank #1 (Strong Buy).

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