Pfizer officially nabbed Seagen for $43 billion, the companies announced Monday, sending SGEN stock higher. Meanwhile, PRVB stock skyrocketed after Sanofi said it would buy Provention Bio for $2.9 billion.
The Pfizer-Seagen deal caps off a lengthy saga in which, initially, Merck was rumored to be in discussions to buy the cancer specialist. Now, Pfizer will pay $229 per share of Seagen stock in a transaction expected to close late this year or early next.
RBC Capital Markets analyst Gregory Renza says the Pfizer takeover validates Seagen's platform, research and development prowess and commercial engine. Seagen uses antibody drug conjugates, or ADCs, to fight tumors. ADCs are torpedo-like payloads of toxic chemicals directed toward cancer to limit damage to surrounding healthy tissue.
Pfizer expects Seagen to add at least $10 billion to its top line in 2030. That timing is crucial with Pfizer expected to lose several billion dollars in revenue as patents on key products begin to expire over the next decade. This year, Seagen calls for its sales to grow 12% to $2.2 billion.
On the stock market today, SGEN stock soared 14.5% to close at 197.65. Pfizer stock rose 1.2% to 39.86. PRVB stock catapulted 259.7%, ending the day at 24.10, as Sanofi stock inched down 0.5% to 47.03.
33% Premium On SGEN Stock
The price tag for Seagen also came in well above expectations, RBC's Renza said. Initial rumors suggested Merck would pay $200 per share of SGEN stock. The deal values Seagen at a 33% premium over Friday's closing price, he said in a report to clients. This reflects "the commercial and R&D potential," he said.
Seagen sells four products. The biggest is Adcetris, a treatment for Hodgkin lymphoma. In 2022, Adcetris sales grew 19% to $839 million.
The addition of Seagen "will position us at the forefront of innovative cancer and strongly complements our existing portfolio across both solid tumors and hematologic malignancies," Pfizer's Chief Development Officer Chris Boshoff said in a written statement.
Both boards of directors have already approved the transaction. Pfizer will pay for the deal through $31 billion in new, long-term debt. The remainder will come from short-term financing and existing cash. The company expects the deal to be neutral to slightly accretive for adjusted earnings in the third to fourth full year post close. Pfizer expects to hit almost $1 billion in cost efficiencies after three years.
The news helped SGEN stock break out of a cup-with-handle base and a buy point at 182.65, according to MarketSmith.com.
PRVB Stock: Preventing Diabetes
The PRVB stock deal helps Sanofi bolster its efforts in diabetes.
Provention has an approved drug that staves off the development of type 1 diabetes in people age 8 and older. It works in people with abnormal blood sugar, but no symptoms of diabetes — known as stage 2 type 1 diabetes. The drug, dubbed Tzield, can delay the onset of type 1 diabetes by a median of two years. In the final stage, stage 3, patients with type 1 diabetes become dependent on insulin treatment.
"The acquisition of Provention Bio builds on Sanofi's mission to deliver best- and first-in-class medicines and resonates with our purpose of chasing the miracles of science for the benefit of people," said Olivier Charmeil, Sanofi's executive vice president of general medicines, in written remarks.
Sanofi already partnered with Provention on Tzield last year.
"Given our existing partnership and complementary work in the diabetes and immunology spaces, we foresee a seamless integration and execution," Charmeil added.
The deal values PRVB stock at $25 per share. Sanofi expects the wrap the deal in the second quarter.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
