Ceo forum 2023

Pfizer’s $43bn cancer investment potential for big merger in 2023

Pfizer and Seagen have entered a final merger agreement under which Pfizer will acquire Seagen, a global biotechnology company that discovers, develops and commercialises innovative cancer medicines, for $229 in cash per Seagen share for a total enterprise value of $43 billion.

The Boards of Directors of both companies have unanimously approved the transaction, according to an official statement by the company.

The deal is considered a bold marker for a potential trend of huge merger deals between giant pharmaceutical firms in 2023, analysts say, noting it will be an opportunity for Pfizer to increase its cancer drug footprint and build positions in other tumors with large patient populations such as myeloma.

Pfizer expects to finance the transaction through $31 billion of new, long-term debt, and the balance from a combination of short-term financing and existing cash. Pfizer expects to achieve nearly $1 billion in cost efficiencies in the third full year after the completion of the transaction.

The companies expect to complete the transaction in late 2023 or early 2024, subject to fulfillment of customary closing conditions, including approval of Seagen’s stockholders and receipt of required regulatory approvals.

Albert Bourla, Pfizer chairman and chief executive officer described the move as deploying its financial resources to advance the battle against cancer, a leading cause of death worldwide with a significant impact on public health.

Together, Pfizer and Seagen will seek to accelerate the next generation of cancer breakthroughs and bring new solutions to patients by combining the power of Seagen’s antibody-drug conjugate (ADC) technology with the scale and strength of Pfizer’s capabilities and expertise.

“Oncology continues to be the largest growth driver in global medicine, and this acquisition will enhance Pfizer’s position in this important space and contribute meaningfully to the achievement of Pfizer’s near- and long-term financial goals,” Bourla said.

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Seagen expects to generate approximately $2.2 billion of revenue in 2023, representing 12 percent year-on-year growth, from its four in-line medicines, royalties, and collaboration and license agreements, Pfizer said.

When combining the expected strong growth trajectories for these medicines with candidates that could emerge from Seagen’s pipeline, subject to clinical trial and regulatory success, Pfizer believes Seagen could contribute more than $10 billion in risk-adjusted revenues in 2030, with potential significant growth beyond 2030.

Seagen is a pioneer in antibody–drug conjugates (ADC) technology, with four of the twelve total FDA-approved and marketed ADCs using its technology industry-wide.

ADCs are a transformative modality that is emerging as a powerful tool across a broad range of cancers designed to preferentially kill cancer cells and limit off-target toxicities.

Seagen has developed a leadership position in ADC technologies over the last 25 years, with groundbreaking and proprietary technology that is positioned for significant growth in 2023 and beyond.

Seagen is also poised to expand the impact of its therapeutic approach with its broad and deep pipeline that includes eleven new molecular entities, many with the potential to treat large patient populations and all with global commercial rights.

The proposed acquisition is also expected to enable for combination potential across both the Seagen and Pfizer pipelines and will leverage Pfizer’s protein engineering and medicinal chemistry capabilities to advance Seagen’s ADC technology to unlock potential novel target combinations and next-generation biologics.

According to Pfizer, Seagen is also advancing innovative technologies capable of potentially generating multiple investigational new drug applications (INDs), including next-generation linker or payload technologies for ADCs and other innovative antibody platforms that directly engage the immune system to destroy tumors.

David Epstein, Seagen chief executive officer said the merger would contribute immensely to the discovery, development, and commercialization of transformative cancer medicines that make a meaningful difference in people’s lives.

“The proposed combination with Pfizer is the next step for Seagen to further its strategy. This compelling transaction will deliver significant and immediate value to our stockholders and provide new opportunities for our colleagues as part of a larger science-driven, patient-centric, global company,” Epstein said.

Pfizer Oncology has an industry-leading portfolio of 24 approved innovative cancer medicines that generated $12.1 billion in 2022 revenues, including therapies for metastatic breast cancer and prostate cancer.

However, an analysis by The MergerSight Group indicates that Pfizer has been looking for acquisitions to help offset an expected sales loss of $17 billion by 2030 as some top-selling drugs lose patent protection in the next several years.