To replenish its drug pipeline in the wake of a steep sales decline of its Covid-19 pharmaceuticals, Pfizer has accepted the purchase of oncology-focused company Seagen for a cumulative asset value of $43 billion. Analysts claim that the deal, which represents a significant pharmaceutical deal since AbbVie’s agreement to purchase Allergan for $63 billion in 2019, heralds a resurgence in merger and acquisition activity after an overall decrease in activity last year.
Pfizer will pay $229 in funds per share for Seagen, funding the deal with cash, short-term borrowing of $31 billion, and additional long-term debt. The corporation is incurring a cost of nearly 35% above Seagen’s Friday closing price.
Pfizer and Seagen Deal Highlights
Major pharmaceutical corporations have shown minimal interest in purchasing assets at a discount, despite a big decline in biotech stocks well over the past year. Instead, they’ve tended to look for less dangerous businesses that contain pharmaceuticals that are either already on sale or almost ready for approval.
After predicting that severe drops in sales of Covid immunizations and therapies would cause revenues to plunge by a third to between $67 billion and $71 billion in 2023, Pfizer seems to be under pressure to make a significant transaction. The deal now contributed to Pfizer’s short- and long-term financial objectives, according to Pfizer CEO Albert Bourla, who also stated that the pharmaceutical company was using its financial resources to progress the fight against cancer.
Key medications will lose their patent protection well before the decade’s end, and thus many of the largest pharmaceutical corporations in the world need to replenish their drug portfolios. Sanofi, a French pharmaceutical giant, agreed to pay $2.9 billion for Provention Bio, the maker of a Type-1 diabetes medication, earlier on Monday to expand its drug development in response to an investor push to produce other acquisitions.
Seagen and Potential Issues Regarding FTC
ADCs, a type of medication created as a specialized therapy for cancer cells, was invented by Seagen. They function by locating and eliminating tumors while sparing healthy cells. Given that the goods of the two firms don’t significantly overlap, several analysts claimed that a merger between Pfizer and Seagen is unlikely to result in a negative reaction from the Federal Trade Commission.
Seagen anticipates revenue of around $2.2 billion in 2023, an increase of 12% over the previous year. Pfizer predicts that Seagen will generate more than $10 billion in risk-adjusted revenues by 2030.
Given that Pfizer lacks an antibody-drug conjugate or even a significant antibody-based cancer platform, Evan Seigerman, an analyst at BMO Capital Markets, stated that they do not believe the FTC has any cause for concern. Subject to regulatory approvals, the corporations anticipate that the deal will close in late 2023 or early 2024.