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Pfizer favored over Merck for Seagen acquisition: SVB analyst


Pfizer’s (PFE) interest in Seagen (SGEN) marks the second time in a year the cancer-focused biotech has been an acquisition target by a major pharmaceutical player in the cancer space.

Seagen was in discussions mid to late last year with Merck (MRK), but the talks fell apart over a disagreement on pricing, according to reports.

The Wall Street Journal reported Sunday Pfizer’s interest in the potentially $30 billion or more deal. That differs from Merck’s $40 billion, which was the market capitalization of the company at the time.

One potential conflict for the Pfizer deal is Merck’s partnership with Seagen on a therapy, Padcev, in combination with Merck’s blockbuster Keytruda.

SVB Securities analyst Andrew Berens said Pfizer could divest the bladder cancer therapy Padcev, to avoid anti-trust scrutiny. That’s because Pfizer also has a partnership with Seagen, splitting the rights to Bavencio, a therapy to manage bladder cancer. This, Berens notes, could be a source of anti-trust concerns.

Both Pfizer and Merck are facing patent cliffs — Pfizer with a loss of $17 billion from patent expirations by 2030, including some from the cancer space. Meanwhlie Merck’s biggest obstacle is keeping its $20 billion blockbuster Keytruda on patent. Merck is pursuing this by changing the formulation and delivery method.

Pfizer company logo is seen at a Pfizer office in Puurs, Belgium, December 2, 2022. REUTERS/Johanna Geron

Pfizer company logo is seen at a Pfizer office in Puurs, Belgium, December 2, 2022. REUTERS/Johanna Geron

In June 2022, when the Seagen and Merck deal was first being discussed, investors had mixed opinions. While the cancer portfolio made sense, Seagen’s assets would not help solve Merck’s Keytruda problem, SVB analysts wrote then.

Instead, SVB sees the Seagen deal as a good option for Pfizer, as the biotech could see revenue of nearly $11 billion by 2030 base on its current pipeline.

“We think a potential deal is less complex than the Merck deal discussion, and is unlikely to be adversely impacted by the same uncertainties,” the analysts wrote.

If it goes through, the acquisition would be Pfizer’s fourth, and largest, in a year, as it continues to leverage it’s COVID-19 vaccine and treatment revenue. Pfizer’s cash pile of more than $20 billion was boosted by sales to governments and entities globally during the pandemic.

In 2022, Pfizer acquired ReViral in June for $525 million, and in October it completed its acquisitions of Biohaven Pharma for $11.6 billion and Global Blood Therapeutics for $5.4 billion.

Follow Anjalee on Twitter @AnjKhem

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