Pfizer is set to expand its expertise in cancer treatment by purchasing Seagen for $43 billion. Seagen is a biotech drug manufacturer located in Bothell, Washington that specializes in antibody-drug conjugate technology. This involves the use of monoclonal antibodies, which are artificially produced proteins that locate cancer cells and deliver drugs that kill cancer cells while sparing healthy cells.
The deal will combine Pfizer’s (NYE:PFE) strength and scale with Seagen’s technology, according to Pfizer CEO Albert Bourla. Pfizer’s oncology division, which includes treatments for prostate cancer and the breast cancer medication Ibrance, generated $12 billion in revenue last year. Seagen, which changed its name from Seattle Genetics in 2020, saw total revenue grow about 25% last year to nearly $2 billion. The company reduced its loss from $674 million to $610 million in 2021.
Seagen’s Impressive Growth:
Seagen’s top-selling drug, Adcetris, treats lymph system cancers and generated $839 million in sales last year. This represents a 19% increase over the previous year. Seagen also has a deal with Pfizer’s Array BioPharma to create, manufacture, and sell the breast and colorectal cancer medication Tukysa, which generated $353 million in sales last year. Additionally, Seagen’s Padcev, which treats certain urinary tract cancers, including bladder cancer, saw sales rise 33% to $451 million last year. Seagen anticipates generating approximately $2.2 billion in revenue this year, a 12% growth.
Financing the Deal
Pfizer recorded approximately $100 billion in total revenue last year and has been well-funded due to the success of its COVID-19 vaccine and treatment, Comirnaty and Paxlovid. Bourla announced earlier this year that the company plans to use its “extraordinary firepower” to acquire products that will produce $25 billion in incremental revenue by 2030. Pfizer has previously spent $11.6 billion on migraine treatment developer Biohaven Pharmaceutical, $5.4 billion on sickle cell disease treatment manufacturer Global Blood Therapeutics, and $6.7 billion on Arena Pharmaceuticals.
Impact on the Market
Pfizer plans to launch 19 new products or new indications for existing products over the next year and a half. The company needs more revenue sources because patents protecting medications like Ibrance will expire in the coming years. Pfizer announced on Monday that it will finance the transaction mostly with $31 billion in new, long-term debt. Both company boards have approved the deal, but regulators still need to review it, and Seagen shareholders must approve it. The companies expect to complete the transaction in late 2023 or early 2024. Pfizer’s shares fell about 2% to $38.55 while Seagen’s stock rose nearly 20% to $206.40 before the market opened on Monday.
Pfizer Inc Stock Analysis
According to the opinions of 21 analysts, the average price target for Pfizer Inc. in the next 12 months is USD 49.73. These analysts also have given Pfizer Inc. an overall rating of Hold. However, the folks at Stock Target Advisor seem to be pretty bullish on the company. They’ve analyzed 14 positive signals and 3 negative signals and believe Pfizer Inc. is headed for good things. Currently, Pfizer Inc’s stock is trading at USD 39.39, which is a drop of 4.28% over the past week, 10.23% over the past month, and 21.64% over the last year.