Pfizer is spending about $43 billion to acquire Seagen, the Bothell-based biotech giant formerly known as Seattle Genetics.
Pfizer plans to let the cancer treatment developer “continue innovating,” except with more resources than it would have alone, Pfizer chair and CEO Albert Bourla told analysts.
“We are not buying the golden eggs,” he said. “We are acquiring the goose that is laying the golden eggs.”
Pfizer has said it intends to maintain Seagen’s sites in the Seattle area and in south San Francisco, said David Caouette, a Seagen spokesperson. That commitment includes a 270,000-square-foot manufacturing facility in Everett expected to open in 2024.
Seagen, which employs about 1,800 people in the Seattle area and 1,500 elsewhere, specializes in working with antibody-drug conjugate, or ADC, technology. Its key products use lab-made proteins called monoclonal antibodies that seek out cancer cells to help deliver a cancer-killing drug while sparing surrounding tissue.
David Epstein, Seagen’s chief executive, said Monday that the deal is the “right next step” for Seagen, which was founded in 1997 and went public in 2001.
“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 in a statement.
Both companies’ boards have unanimously approved the deal. But regulators still need to look at it, and Seagen shareholders will have to approve it. The companies expect to complete the transaction in late 2023 or early 2024.
The company saw an abrupt change in leadership last year when CEO and co-founder Dr. Clay Siegall resigned on May 16, weeks after he was arrested at his Edmonds-area home. Prosecutors did not charge Siegall, citing evidentiary issues.
Siegall, the company’s largest individual shareholder as of Dec. 31, and others stand to benefit greatly from the acquisition, which will see Pfizer pay $229 in cash for each share of Seagen. Seagen shares, which traded at $173 at the end of the day Friday, jumped to $198 by Monday after the deal was announced.
Siegall, who held 565,526 shares in the company at the end of 2022 according to S&P Global Market Intelligence, stood to be paid $129.5 million if his holdings remain unchanged.
Cancer treatments like those produced by Seagen are a priority for Pfizer. They brought in $12 billion in revenue for the drugmaker last year. But Pfizer has only marketed a couple first-generation ADC treatments, a spokesperson said.
Seagen has four treatments on the market. It also has a pipeline of drugs under development that includes potential treatments for a form of lung cancer and advanced breast cancer.
“We think this really changes dramatically the oncology presence of Pfizer, makes it one of a kind,” Bourla said.
Seagen’s top seller, Adcetris, treats lymph system cancers. It brought in $839 million in sales last year, a 19% increase over the previous year.
Seagen also has a deal with Pfizer’s Array BioPharma to develop, make and sell the breast and colorectal cancer treatment Tukysa. It brought in $353 million in sales for Seagen last year.
The company, which changed its name from Seattle Genetics in 2020, saw total revenue grow about 25% last year to nearly $2 billion. Seagen also shaved its loss to $610 million from $674 million in 2021.
The drug developer predicts about $2.2 billion in sales for this year.
Marc Cummings, president and CEO of the biotech industry association Life Science Washington, said Seagen’s acquisition “validates Seattle and Washington as a top 10 life science cluster in the country,” and cements the region’s position as a place for pioneering developers of next-generation cancer therapies.
As was the case when Seattle biotech company Juno Therapeutics was acquired by a larger firm in 2017, the deal will enable Seagen’s advances to reach more patients while bringing additional investment into our region, Cummings said.
“Ultimately, we’re seeing Washington’s life science industry hit its stride,” he continued. “Investors and companies around the world are paying close attention, and investing not just in assets, but in the quality of the science, rich expertise, and top talent in the region.”
Pfizer booked about $100 billion in total revenue last year and has been flush with cash thanks to sales of its COVID-19 vaccine and treatment, Comirnaty and Paxlovid.
Bourla said earlier this year that the company planned to use its “extraordinary firepower” to buy products that will deliver $25 billion in incremental revenue by 2030.
The deal announced Monday and some previous acquisitions will help Pfizer account for most of that. But Bourla emphasized Monday that the company expects Seagen’s contributions to extend beyond the end of the decade.
The drugmaker needs more revenue sources in part because it faces the expiration of patents protecting drugs like its breast cancer treatment Ibrance from cheaper competition in the coming years.
Pfizer said Monday it will pay for Seagen mostly through $31 billion in new, long-term debt.