Pfizer is in early talks to acquire cancer specialist Seagen, according to a report that sent SGEN stock flying on Monday.
If true, it would help Pfizer add to its lineup of cancer treatments. Seagen helped pioneer a class of anti-cancer drugs known as antibody drug conjugates, or ADCs. These drugs work like targeted torpedoes, dropping off toxic chemicals at the tumor's site and limiting damage to healthy tissue.
This is the second Big Pharma reportedly in talks to acquire Seagen in less than a year. Last summer, reports suggested Merck could buy Seagen for more than $200 per share. That led SGEN stock to trade up north of 180. By December, shares had slipped down to around 120.
On today's stock market, Seagen stock surged 10.4% to close at 178.16. Pfizer stock sank 2.3% and closed at 40.78.
SGEN Stock: Antitrust Concerns?
The talks are still early and could fall apart, according to the Wall Street Journal.
"Here we go again," Needham analyst Ami Fadia said in a report. Though, she noted it's possible antitrust concerns could undo any potential deal.
"Last night's report mentions the potential for a stringent antitrust review of any proposal as one of the multiple hurdles that would need to be overcome," she said. "However, we point out that the direct portfolio overlap is limited to bladder cancer in this case."
Seagen and partner Astellas Pharma make a bladder cancer treatment called Padcev. Pfizer and EMD Sereno sell another bladder cancer medicine called Bavencio. Notably, the drugs have different mechanisms. Padcev is an ADC, while Bavencio is an immuno-oncology drug.
Fadia has a buy rating and 178 price target on SGEN stock.
Pfizer Patents To Expire
For Pfizer, a deal could help stave off several billion dollars in lost revenue by 2030 as patents on key products expire. The company is also flush with cash due to widespread use of its Covid vaccine and antiviral pill, Paxlovid. Last year, those two products brought in more than $56.7 billion in sales.
Last year, Pfizer bought Global Blood Therapeutics for more than $5 billion and the migraine drug assets of Biohaven Pharmaceutical for north of $10 billion. Seagen — which had sales of $1.96 billion in 2022 — has a market cap that tops $30 billion and would likely command a premium takeover price.
The news sent SGEN stock closer to a buy point at 183.10 out of a cup base, according to MarketSmith.com.
Representatives of Pfizer and Seagen declined to comment in emails to Investor's Business Daily.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
