Pfizer Inc. PFE 1.9%increase; Green Up pointing Triangle has agreed to $43 billion for biotech Seagen Inc. SGEN 14.51%increase, green up pointing Triangle and its pioneering class in targeted cancer drugs.
According to the terms of the deal, Pfizer would pay $229 per share in cash. Both companies anticipate the deal, which also includes debt, to close in the latter half of this year or early next.
It is however likely to be scrutinized by antitrust regulators who have increased their review of healthcare deals.
This agreement is a sign that big pharmaceutical companies , despite being subject to close antitrust scrutiny and higher interest rates are ready for heavy deal-making in the coming year.
In recent years, drugmakers have retreated from what was a tense deal pace after potential targets became too expensive. They now have to inject new drugs and their sales into aging lineups. price tags droppedd due to research failures and rising interest rates.
On Monday, French drugmaker Sanofi SA -0.53%decrease; red up pointing triangular stated it would purchase Provention Bio, PRVB 259.70%increase, and green up pointing triangular, which sells Tzield diabetes treatment, in a deal worth $2.9 billion.
Seagen, a company based in Seattle, pioneered a class known as antibody-drug conjugates (or ADCs), which can target tumors and strike them with toxic agents.
Drugs could be the next big segment of the $375 billion global cancer-drugs market. They will account for $31 billion in 2028 sales, according to estimates by Evaluate, a drug-market research firm.
Pfizer, a New York-based company, has been searching for acquisitions that will help it offset a predicted sales loss of $17 Billion by 2030. This is due to the fact that some of its top-selling drugs such as Eliquis and Ibrance (breast-cancer drug Ibrance) lose their patent protection over the next few years.
The company’s recent success has been buoyed by the sales of Pfizer’s Covid-19 drug and vaccine Covid-19. The company’s recent performance has been buoyed by the sales of Pfizer’s Covid-19 vaccine and drug. However, executives have stated that they cannot count on the same level in future sales because of the pandemic. Therefore, the company will use its Covid-19 revenue of tens to billions of dollars for deal-making.
Pfizer’s key business is cancer treatment. It contributed more than $12 Billion to the company’s total sales of $100 Billion last year.
Pfizer is looking to expand its cancer-drug portfolio. Analysts believe Seagen’s therapies will expand Pfizer’s portfolio of bladder and breast cancer drugs. They also complement its efforts to increase its positions in other tumors such as myeloma.
“We are investing in cancer,” said Chief Executive Albert Bourla in an interview. “We are investing in order to grow.”
Pfizer executives stated that they believe federal antitrust authorities would approve the deal, as Seagen and Pfizer have complementary capabilities.
Pfizer shares rose 2.7% on Monday morning on the New York Stock Exchange, while Seagen stock increased more than 16%.
Pfizer executives stated that the Seagen acquisition will enable them to reach their goal of $25 billion in additional revenue by 2030. This will be achieved through business development, such as deal-making.
Seagen, with $2.2 billion in revenues this year, could be worth more than $10 billion by 2030, if Seagen is able to expand the use of its drugs to treat more types of cancers, Pfizer executives stated.
Pfizer’s revenue target exceeds many analysts’ estimates, but Mr. Bourla deemed the target reasonable. He stated that Pfizer could help Seagen increase its commercial capabilities as well as use its global drug development network to accelerate Seagen’s pipeline.
Pfizer also stated that it expects to save $1 billion from the deal over three years. This is largely due to avoiding having its sales force expand or other costs. Seagen’s can be used instead by Pfizer.
Pfizer and other drugmakers were attracted to Seagen because of its potential for ADCs. Merck and Co. had been in discussions to buy Seagen last year but couldn’t agree upon a price, The Wall Street Journal reported. After the Journal’s report last month that the firms had begun talking, Pfizer’s negotiations with Seagen moved quickly.
According to Mr. Bourla, Pfizer was keen to add cancer drugs into its portfolio. Seagen is attractive because it has four approved products, which don’t have the risk of failing during testing. It also has a promising pipeline. “It’s the perfect match, perfect target. “We looked at everything,” Mr. Bourla stated.
ADCs have been approved for certain common cancers like breast cancer. Drugmakers are exploring the possibility of using them with other cancer agents such as immunotherapies, which are some top-selling drugs in the world.
Seagen currently has nine studies that test ADCs with immunotherapies.
To ensure Seagen scientists continue innovating, Mr. Bourla stated that Pfizer plans to keep Seagen’s laboratories in Seattle & San Francisco.
“We aren’t buying the golden eggs. On a conference call with investors and analysts, Mr. Bourla stated that we are buying the goose that lays golden eggs.
Seagen offers four products, three which include ADCs. Padcev was approved by Seagen in 2019 to treat bladder cancer patients who have not improved with other treatments.
The U.S. Food and Drug Administration has begun reviewing a combination of Padcev and Merck’s Keytruda immunotherapy to treat advanced bladder cancer in patients not eligible for chemotherapy. According to FactSet analysts, Padcev sales could reach $2.8 billion by 2028.
David Epstein, Seagen’s Chief Executive, stated that the company is making progress in its drug-development programs. However Pfizer has more resources and chemistry capabilities.
He said that it was obvious that the deal accelerates the mission he and his team set up when he joined the company.
Seagen, formerly known as Seattle Genetics had become a target for deals after Clay Siegall, the CEO, chairman, and co-founder, resigned last January as the company investigated a claim of domestic violence. According to the company, Dr. Siegall denied all allegations and said that he was currently going through a divorce. His lawyer stated that Dr. Siegall was not charged by the prosecution because there was not enough evidence.
After the talks with Merck ended, Mr. Epstein assumed the reins of Seagen in November. He was preparing a new course for the company.