Immunomedics' deal mastermind in line for $2.35B payout after Gilead buy—despite the lack of a bidding war

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Immunomedics' executive chairman, Behzad Aghazadeh, is on tap for $2.35 billion from the company's $21 billion sale to Gilead Sciences. (Getty Images)

Thanks to Gilead Sciences, which is splashing out major money for Immunomedics, the small biotech’s executive chairman is in line for a huge payout.

Behzad Aghazadeh, who has been Immunomedics’ chairman since 2017, is in line for a whopping $2.35 billion from selling the roughly 11% stake he has in Immunomedics shares to Gilead, according to a securities filing. And if he doesn’t stay on as an executive? A golden parachute worth $10.4 million is in order.

The majority of Aghazadeh’s payout—$2.31 billion, to be specific—came from existing shares he owned, and the rest came from converting his stock options and restricted stock units.

Aghazadeh first came to power at Immunomedics by way of venBio Advisers, where he served as a managing partner. At that time, the life sciences investment shop had gathered a 9.9% stake in Immunomedics and launched an attack on management. The activist investor quickly derailed a $2 billion Seattle Genetics licensing deal that was also centered on then-experimental Trodelvy, accusing Immunomedics of selling the drug too cheaply without much effort to find a higher bidder.

Now, it looks like venBio was right, and a little persistence got Aghazadeh a big payday.

RELATED: Gilead needs 'heroic' Immunomedics revenues to get a return on $21B deal: analyst

After seeing the $21 billion price Gilead agreed to pay for Immunomedics, industry watchers assumed the Big Biotech must have had to fight hard to snatch up the Trodelvy maker from other shoppers. But as a securities filing shows, there was surprisingly not much of a bidding war.

Let’s start from the beginning. Immunomedics regularly talked to other firms about potential collaborations, and, on Jan. 9, 2019, Gilead Chief Financial Officer Andrew Dickinson, who was then executive vice president in charge of corporate development, first approached the company. But that was merely an informal talk about Gilead’s interest in learning more about Immunomedics as part of the company’s interest in building up its oncology portfolio.

Throughout 2019, periodic discussions were had, but things got a little more serious at the 2020 annual J.P. Morgan Healthcare Conference, shortly after Immunomedics filed Trodelvy for FDA consideration in triple-negative breast cancer (TNBC). At the event, Immunomedics management, including Aghazadeh, talked to three companies about potential partnerships. But it was only from May, after Trodelvy’s FDA nod in TNBC, that Immunomedics reached out to a bunch of companies, including Gilead and those other three firms, for deal talks.

Around Aug. 10, those four drugmakers submitted their preliminary proposals for “a potential collaboration arrangement,” and Immunomedics subsequently let them in on some confidential data, including those from Trodelvy’s phase 3 confirmatory TNBC trial, dubbed Ascent, and from the phase 2 Trophy-U-01 bladder cancer trial.

RELATED: ESMO: New Trodelvy breast, bladder cancer data show why Gilead's going big for Immunomedics

One company, Party A, was clearly intrigued by the data. On Sept.7, the company came up with a written proposal to buy out Immunomedics for $55 per share, on the condition that the pair unveiled the deal ahead of the European Society for Medical Oncology (ESMO) virtual meeting.

Upon receipt of that offer, Aghazadeh quickly talked with Gilead CEO Daniel O’Day, who told his Immunomedics counterpart that Gilead was also interested in a full-on buyout.  

Things began to heat up as ESMO was just around the corner. Just two days later, on Sept.9, O’Day presented Gilead’s first offer, $82 per share, which was already 49% more than Party A’s price.

Immunomedics then told Party A that its offer was substantially below that of another firm, and representatives of Party A indicated the firm may be willing to consider a new proposal in the range of the mid-to-high $60s per share. That was obviously still way lower than Gilead’s offer.

Without a competitive bidder, Aghazadeh went back to O’Day on Sept. 10, asking Gilead to increase its purchase price to $90 per share in exchange for an exclusivity agreement. O’Day counteroffered $87 apiece, to which Aghazadeh again countered with $88 per share, and that’s the price the two shook hands on

The $88-per-share price Gilead is paying for Immunomedics is about three times the small biotech’s value at the beginning of 2020. As for Aghazadeh, he had previously paid even less for Immunomedics shares; in mid-2018, for example, the company chairman bought 775,000 shares at around $23 to $24 apiece.