Pfizer Considers Potential $40B Seagen Acquisition

Pfizer Inc is reportedly in talks to buy the cancer drugmaker Seagen Inc after a potential acquisition by Merck last year fell through. In August 2022, it was reported that Merck was considering a $40 billion price tag for Seagen’s drugs and infrastructure, but the deal supposedly failed due to a disagreement over the pricing of assets. Now that Pfizer has entered the picture, it’s possible that the price could rise higher based on a successful fiscal year from Seagen and Pfizer’s available cash surplus.

Merck’s previous pursuit of Seagen was also dogged by a strong probability of FTC action based on the two companies’ shared capabilities for treating Hodgkin’s lymphoma and other cancers. While Pfizer and Seagen aren’t facing any serious antitrust issues, they may have to divest interests in a set of cancer treatments. Both companies previously partnered on Bavencio — a bladder cancer therapy — but Seagen also owns a similar therapy, Padcev, that could be a concern for regulators.

Seagen demonstrated significant growth in 2022, generating $2 billion in total revenue while weathering a governance crisis where CEO Clay Siegall resigned, and former Novartis executive David Epstein took over. In addition, the company received FDA acceptance for its combinatory metastatic urothelial cancer treatment and is in clinical trials for an advanced urothelial drug and a melanoma treatment.

As of Friday, Seagen had a market cap of $30 billion, and the stock price has grown since the announcement of a possible acquisition. The Seagen deal would be Pfizer’s largest acquisition this year after three previous buyouts.

Pfizer is using its billions in COVID-19 profits to fund its recent acquisitions. The company earned $100 billion in revenue last year, more than half of which was driven by vaccine and Paxlovid sales. In the aftermath of the pandemic, CEO Albert Bourla assured shareholders that the company would continue to grow in the new decade. Much of this plan relies on continued acquisitions of smaller companies with pipelines full of FDA-approved drugs. Recently the company has scooped up tech firm ResApp Health as well as Arena Pharmaceuticals, Global Blood Therapeutics, Biohaven Pharmaceuticals, and Reviral.

"You should expect to see many business development deals that will allow us to bring in-house a lot of potential medicines that could become approved in the second part of the decade,” said Bourla in an earlier earnings call.