Pfizer Inc is in early-stage talks to acquire cancer drugmaker Seagen Inc in a potential multi-billion dollar deal, the Wall Street Journal reported, after advanced discussions between Merck and Seagen fell through last year.
The report on Sunday, which cited people familiar with the matter, said the offer could be well over $30 billion but there could be a number of hurdles, including the potential for a stringent antitrust review of any proposal.
Seagen had a market capitalisation of roughly $30 billion, as of Friday's close. Its shares have fallen nearly 10 per cent since July, when the deal talks with Merck were first reported. They rose 13 per cent to $182.55 on Monday.
Pfizer declined to comment on the WSJ report, while Seagen did not immediately respond to a Reuters request for comment.
The Merck-Seagen deal reportedly failed over concerns that the Federal Trade Commission (FTC) would launch an antitrust investigation, but analysts said the Pfizer combination was not raising any red flags.
"A Pfizer/Seagen combination will invite less scrutiny from the FTC due to less overlap of their products when compared to a Merck/Seagen deal," said Zhiqiang Shu, analyst at Berenberg Capital Market.
Shu said Seagen was poised to grow in the next decade and has "a perfect profile for a takeout target", which could work well for Pfizer that expects to lose $17 billion in annual sales by 2030 due to patent expirations for top drugs, and as demand for its Covid products begins to decline.
Seagen, which specialises in antibody-drug conjugates (ADCs) that bind to tumour cells and then release cell-killing chemicals, made nearly $2 billion in revenue last year driven by demand for its approved therapies such as lymphoma treatment Adcetris and breast cancer drug Tukysa.
"After a year of waiting for something impactful, this may be it," said Evan Seigerman, analyst at BMO Capital Markets, referring to the potential deal, at a time analysts have pointed to the need for larger acquisitions by Pfizer.
Merck, which bought ADC-maker Imago BioSciences for $1.35 billion in November, is unlikely to show renewed interest in Seagen, analysts said. Merck was not immediately available for comment.
"I'm sure there's always a possibility that there could be other companies interested and there are other large pharma companies that do need to transact. I'm thinking more of the European pharma names," said Seigerman.
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