Merck is unlikely to finalize the rumored takeover of Seagen before its earnings release, according to a new report that toppled SGEN stock Monday.
According to the Wall Street Journal, Merck is waiting on the results of a key Seagen study and the outcome of a royalty payments case. Both could impact Seagen's value. The Journal cited people familiar with the matter.
On today's stock market, SGEN stock tumbled 5.7% to 168.47. Merck shares fell 2.8% to 92.34.
SGEN Stock: Bolstering Merck's Oncology Business?
There is no guarantee the deal will come to fruition.
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Rumors first emerged earlier this summer that suggested Merck could look to announce the roughly $40 billion deal along with its earnings release on July 28. SGEN stock rallied. Acquiring Seagen would help bolster Merck's pipeline of cancer treatments, the biggest of which is immuno-oncology drug Keytruda.
Seagen makes antibody drug conjugates, or ADCs. This class of drugs sends toxic chemicals directly to a tumor, helping lessen the toxicity to surrounding healthy tissues.
The timing is key for Merck. The first patent protecting for Keytruda will expire in 2028, leaving Merck open to generic competition.
SGEN stock has soared on the potential takeover. But on Monday, Seagen shares retreated from a cup-with-handle base with a buy point at 183.10, according to MarketSmith.com. Seagen stock has a strong Relative Strength Rating of 97 out of 99, putting its 12-month performance among the top 3% of all stocks, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
