Pfizer makes moves to acquire Seagen in potential $30B+ deal 27th February 2023
Pfizer is in talks to acquire cancer drugmaker Seagen in a deal that could be worth more than $30 billion, after acquisition talks between Merck and the biotech broke down last year, the Wall Street Journal reported Sunday night.
A potential deal between Pfizer and Seagen isn’t a guarantee and the talks are still at an early stage, the WSJ reported, citing people familiar with the matter. Representatives for Seagen and Pfizer declined to comment.
Shares of Pfizer $PFE were down 1% today to $41.34. Seagen $SGEN was up almost 12% at $180.07 with a market cap of $33.6 billion.
For Seagen, taking a deal with Pfizer would be a meaningful come-down: The Seagen-Merck deal broke down over price, Bloomberg reported at the time, that was about $10 billion higher than the current reported target under discussion with Pfizer.
Pfizer has been interested in Seagen since the original acquisition talks with Merck began after CEO Clay Siegall stepped down from the company, the WSJ reported. Siegall left last year amid a roiling controversy over allegations of domestic violence, which he denied. Siegall was reportedly against selling the company.
David Epstein, who cut his teeth building out Novartis Pharmaceuticals’ oncology group, took over as leader of Seagen last fall.
The acquisition of Seagen would build out Pfizer’s oncology program as the company looks for new growth after its blockbuster Covid-19 vaccine sales begin to moderate.
Andy Hsieh, an analyst at William Blair, told Endpoints News he’s “on the more skeptical side of things” about a deal getting done. Hsieh said the price of a deal would likely have to be at or above the previously reported discussions between Merck and Seagen of $40 billion.
“If you look at the motivation behind both companies, I agree that Pfizer needs that $17 billion revenue gap due to loss of exclusivity by 2030. So it makes sense to look at big companies like Seagen,” Hsieh said. “On the other hand, for Seagen, they just named a new CEO, and he came in and did a comprehensive pipeline review and long term and basically outlined all the long term boat drivers. So for him to turn around and sell the company really quickly, that would strike me as kind of surprising.”
Given the size of the acquisition, the FTC stepping in for an audit is also a potential hurdle, Hsieh added.
Seagen focuses on antibody-drug conjugates, like its drug Adcetris, which recently snagged a label expansion for pediatric patients with high-risk classical Hodgkin’s lymphoma. The company also scored an accelerated approval earlier this year for Tukysa to be used in combination with Roche’s Herceptin for patients with a specific type of HER2-positive colorectal cancer. Last year, it brought in sales of $2 billion.
Pfizer has plenty of cash in the bank if it chooses to do a deal. Driven by sales of its Covid-19 products, it raked in a record $100 billion for 2022. As its vaccine sales slow, it anticipates 2023 to reap $67 billion to $71 billion. CEO Albert Bourla has pointed to dealmaking as a way of growing the company’s top line.