Cancer Drugmaker Seagen To Be Acquired By Pfizer For $43 Billion

Pfizer Inc. is purchasing cancer-drug maker Seagen Inc. for an enterprise value of $43 billion, using the biggest deal of the year to set its course out of the pandemic and back into mainstream pharma. 

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Pfizer will pay $229 a share in cash for Bothell, Washington-based Seagen, according to a statement Monday, about a third more than the drugmaker’s closing share price Friday. It expects the deal to close late this year or early 2024.

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Seagen shares rose 16% in premarket trading as of 11:31 a.m. in New York, bringing its market value to $37.5 billion. New York-based Pfizer rose 2.5%. Through Friday’s close, Seagen had gained 34% since the year began. 

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The acquisition is by far the biggest takeover of this year, during which overall dealmaking has been down by more than 50%, according to M&A data compiled by Bloomberg. It shows how Big Pharma still has the appetite and firepower for deals, even as the collapse of SVB weighs on the short-term outlook for takeovers.

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Other health-care deals Monday demonstrated the sector’s resilience as French drugmaker Sanofi agreed to buy Provention Bio Inc. for $2.9 billion and Cinven offering to take Synlab AG private. CVS Health Corp. last month agreed to buy Oak Street Health Inc. for $10.6 billion, the second biggest deal so far this year.

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Antibody Drugs

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Seagen is a leader in developing a type of medicine called antibody-drug conjugates, or ADCs. These precision medicines deliver cancer-killing drugs so potent they might otherwise be too toxic to use. The delivery mechanism uses antibodies to deposit a strong concentration of drug directly at a tumor site, which may increase efficacy with fewer side effects. Seagen’s portfolio will double Pfizer’s pipeline of early-stage experimental cancer therapies, the company said.

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Pfizer has been under pressure to show it can capitalize on its Covid-19 windfall, after vaccine revenue almost doubled its sales in a single year. While the Seagen deal is smaller than some of Pfizer’s megadeals of the past, it’s a bid for an expanded platform in a field, oncology, that will be the industry’s biggest growth market, Chief Executive Officer Albert Bourla said Monday. 

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“We think this really changes dramatically the oncology presence of Pfizer and makes it one of a kind,” Bourla said on a call with analysts. “We aren’t acquiring the golden eggs, we are buying the goose that lays the golden eggs.”

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The acquisition caps months of takeover speculation for Seagen after Merck & Co. targeted the company last year. Talks with Merck stalled over price, according to people familiar with the matter. Suitors saw the potential for a takeover after the resignation of Seagen’s co-founder and former CEO, Clay Siegall, who had opposed a sale, people familiar with the matter have said. 

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Deal Premium

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“This development adds a potentially closing chapter to the events over the last year,” Gregory Renza,  a New York-based analyst with RBC Capital Markets LLC, wrote in a note to investors. The premium Pfizer is paying validates Seagen’s ADC platform, Renza said.

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Pfizer expects to finance the purchase substantially through $31 billion of new, long-term debt, and the balance from a combination of short-term financing and existing cash, according to the statement. Seagen is expected to contribute more than $10 billion in risk-adjusted revenue by 2030.  

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The Federal Trade Commission will likely conduct an in-depth review of the takeover for any potential anti-trust concerns, which will take up to eight months, Bloomberg Intelligence analyst Jennifer Rie said.

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Pfizer’s financial adviser for the transaction is Guggenheim Securities LLC. Centerview Partners LLC is serving as Seagen’s financial adviser and provided a fairness opinion to Seagen’s board. MTS Health Partners also provided financial advice to Seagen.