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Pfizer’s Major Retrace in Seagen Acquisition. What Happens Now?

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Pfizer’s Acquisition of Seagen: Strengthening Oncology Therapeutics

Seagen Inc is a biotechnology company that has made significant contributions to the oncology field. With its focus on developing and commercializing novel monoclonal antibody-based therapies for cancer treatment, Seagen has become a key player in the industry. The company’s flagship product, ADCETRIS, is available in over 65 countries for the treatment of various types of cancer.

In the first quarter of 2023, Seagen reported impressive financial results, with a 22% growth in total revenues and net product sales compared to the previous year. The total revenues for the quarter were $520 million, including net product sales of $469 million. Seagen’s ADCETRIS product saw a significant increase in sales, with $243 million in revenue, a 34% growth from the same period last year. Seagen’s pipeline programs also show promise, with multiple abstracts presented at the AACR Annual Meeting, highlighting the company’s commitment to innovation and the development of next-generation Antibody Drug Conjugate (ADC) technologies.

The recent announcement of Pfizer’s acquisition of Seagen for $43 billion further solidifies the company’s position in the oncology market. This strategic move allows Pfizer to expand its oncology portfolio and provide cancer patients with a wider range of treatment options. Seagen’s expertise in ADCs, a class of medicines that target cancer cells with antibodies, will be a valuable addition to Pfizer’s capabilities.

The acquisition process is currently underway, with regulatory approvals being sought in multiple markets. Once completed, Seagen’s operations, personnel, and facilities, including a planned manufacturing facility in Seattle, will be integrated into Pfizer. This acquisition not only strengthens Pfizer’s position in the oncology market but also has the potential to drive regional development and create employment opportunities in the biotech industry.

In conclusion, Seagen’s strong financial performance and pipeline programs, coupled with the strategic acquisition by Pfizer, position the company for future success in the rapidly growing field of oncology therapeutics.

Pfizer and SeaGen: A Strategic Acquisition Stimulating Oncology Growth ($SGEN)

Pfizer, an American multinational pharmaceutical and biotechnology corporation, has a long history of manufacturing medicines and vaccines for a variety of health domains, such as immunology, oncology, cardiology, endocrinology, and neurology. Pfizer’s top-selling products include the Pfizer–BioNTech COVID-19 vaccine, Nirmatrelvir/ritonavir, Apixaban, a pneumococcal conjugate vaccine, and Palbociclib. Pfizer is a leader in the pharmaceutical industry.

Seagen, on the other hand, is a relatively new biotechnology company with its headquarters in Bothell, Washington. The corporation has made significant contributions to oncology, concentrating on the development and commercialization of novel monoclonal antibody-based therapies for the treatment of cancer. Adcetris (brentuximab vedotin), the flagship product of Seagen, is available in over 65 countries for the treatment of numerous types of cancer. Enfortumab vedotin, tisitumab vedotin, SGN-LIV1A, and other immuno-oncology agents in phase 1 studies comprise the company’s pipeline of prospective therapeutics in development.

The Importance of the Purchase

The $43 billion acquisition of Seagen by Pfizer is a strategic move consistent with the company’s commitment to expanding its oncology portfolio. By incorporating Seagen’s innovative monoclonal antibody-based therapies, Pfizer expands its product line and provides cancer patients with a wider range of treatment options. This acquisition strengthens Pfizer’s competitive position in the rapidly expanding field of cancer therapeutics, especially in the area of antibody-drug conjugates (ADCs) where Seagen has a firm foothold.

Timeline of significant events in Pfizer’s acquisition of Seagen:

  • Pfizer announces a definitive merger agreement to acquire Seagen on March 7, 2023.
  • The transaction was then referred to the European Commission.
  • Pfizer withdraws and resubmits its merger notification with the Federal Trade Commission on June 14, 2023. The interim period stipulated by the Hart-Scott-Rodino Antitrust Act will now expire on July 14, 2023.
  • In a recent development, Pfizer agreed to pull and subsequently refile its merger notification with the Federal Trade Commission (FTC) regarding its planned $43 billion acquisition of Seagen. This decision led to a slight uptick of nearly 1% in Seagen’s premarket trading. The withdrawal and refiling of the merger notification are required under the Hart-Scott-Rodino Antitrust Act. The statutory waiting period under this Act will now expire on July 14, 2023.
  • This refile marks another step in the ongoing process of Pfizer’s acquisition of Seagen, a deal that was announced in March 2023 for $229 per share. Initially, this transaction did not appear to raise any antitrust concerns. However, recent actions by the FTC, which include a lawsuit to block Amgen’s planned $27 billion purchase of Horizon Therapeutics, have raised concerns among M&A investors. This lawsuit is scheduled to be heard in an Illinois federal court in September 2023.
  • Furthermore, on June 1, Pfizer and Seagen referred the transaction to the European Commission, marking an international regulatory step in this acquisition process. Despite these regulatory complexities, Seagen continues to expect the sale to Pfizer to be completed either in late 2023 or early 2024

Seagen’s Platform’s Role in Pfizer’s Strategy

Seagen’s platform, especially its expertise in ADCs, provides Pfizer with a significant advantage. ADCs are a class of medicines that target cancer cells with an antibody and deliver a toxin to these cells, sparing non-targeted cells and diminishing the toxicity of conventional chemotherapy. Pfizer, which places a heavy emphasis on small-molecule drug candidates, can benefit from the platform’s prospective synergies. This acquisition enables the development of new types of agents by integrating Pfizer’s drug database with Seagen’s platform. Pfizer’s CEO, Albert Bourla, has acknowledged this, stating that Seagen’s platform and personnel are of high quality.

Possibile Obstacles Throughout the Acquisition Process

The acquisition presents Pfizer with a substantial opportunity, but it also entails potential difficulties and hazards. The regulatory licencing of Seagen’s drug candidates in multiple markets will be a formidable obstacle. The procedure can be complicated and time-consuming, and approval may be delayed or even denied.

Integration of Seagen’s technology into Pfizer’s existing processes may also be expensive and difficult. This will require meticulous planning and execution to ensure a seamless transition with minimal impact on the operations of the companies.

In addition, Pfizer will need to navigate the intense competition in the market for oncology therapeutics, which includes other manufacturers of ADCs, various types of cancer therapeutics, and novel technologies.

Despite these obstacles, Pfizer’s acquisition of Seagen is a strategic move designed to strengthen the company’s position in the swiftly expanding oncology therapeutics market. By incorporating Seagen’s ADCs into its product lineup, Pfizer can enhance its oncology offering and potentially expand its market share in this sector. In addition, the transaction provides the opportunity to develop novel therapeutics by combining the strengths of both companies.

Pfizer’s Dedication to Seattle and the Biotechnology Industry

Pfizer inherits Seagen’s personnel and facilities, including a planned 270,000-square-foot manufacturing facility north of Seattle, as part of the acquisition. Pfizer’s CEO stated during an investor call that the company intends to retain Seagen’s operations in the Seattle and San Francisco areas, recognising the talent and platform that Seagen provides. He also stated that Pfizer expects to realise nearly $1 billion in “cost efficiencies” in the third complete year after the transaction closes, although he did not anticipate any cuts to Seagen’s research and development programme. Pfizer will utilise Seagen employees in preparation for the launch and commercialization of 19 new products.

This acquisition may have implications for the Seattle biotech industry. The region has been ranked among the top ten employment clusters in biotechnology. The acquisition may serve as a catalyst for regional development, fostering innovation and employment opportunities. Given their experience and skills, Seagen employees are anticipated to be desirable employment candidates for smaller companies and as remote workers in the event of layoffs.

The transaction is anticipated to close at the end of 2023 or the beginning of 2024, pending regulatory approval and other customary closing conditions. As Pfizer looks to the future, the integration of Seagen’s innovative therapeutics and talented personnel represents a promising opportunity to drive growth and solidify the company’s position as an oncology industry leader.

Seagen Inc: Financial Results and Revenue Growth ($SGEN)

The company has shown a strong performance with a significant growth of 22 percent for both total revenue and net product sales, compared to 2022. The total revenues for the first quarter of 2023 were $520 million, including net product sales of $469 million.

Key Highlights

  • PADCEV®, one of Seagen’s products, was granted FDA accelerated approval in combination with KEYTRUDA® as a first-line treatment for cisplatin-ineligible patients with locally advanced or metastatic urothelial cancer.
  • Seagen presented data at AACR on multiple targeted cancer pipeline assets, highlighting emerging next-generation Antibody Drug Conjugate (ADC) technologies.
  • The company has previously announced an agreement to be acquired by Pfizer, with the transaction expected to close late 2023 or early 2024.

Product Highlights

Seagen’s product PADCEV received FDA Accelerated Approval for first-line treatment of locally advanced or metastatic urothelial cancer. The company’s other product, TUKYSA, received FDA Accelerated Approval for people with previously treated RAS Wild-Type, HER2-Positive Metastatic Colorectal Cancer.

Pipeline Programs

Seagen presented multiple abstracts on early-stage pipeline at the AACR Annual Meeting, including clinical, preclinical, and discovery research programs. The company continues to link innovation to impact as it works to optimize the potential of its commercial products and develop next-generation ADC technologies.

Valuation Overview

Valuation Ratios Current 2023E 2024E 2025E
EV/ Sales 17.19 17.90 16.10 16.15

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