Merck’s inability to close the biggest pharmaceutical deal in two years shows just how hard it is to put a price tag on a promising cancer technology — even when it’s one that’s been envisioned for a century.

Merck was vetting Bothell, Washington-based Seagen’s books with the goal of announcing a deal ahead of Merck’s second-quarter results. As earnings came and went, though, talks bogged down on a final purchase price. At an estimated worth of as much as $37 billion, the deal would be the sector’s largest since AstraZeneca bought Alexion Pharmaceuticals for $39 billion in 2020. 

The potential pact was built around Seagen’s technology for linking tumor-targeting antibodies to toxic chemotherapy in an attempt to fight cancer with fewer side effects. The biotech already has drugs approved for four types of cancer, with the potential for much more.

(Gabriel Campanario / The Seattle Times)
Clay Siegall built Seattle biotech firm Seagen into a $1.6B giant. Then the cops came calling

But exactly how transformative its technology will be in the long run turns out to be surprisingly hard to predict. And since the talks were first reported, Seagen lost its bid for a cut of sales from Astra and Daiichi Sankyo‘s breast cancer drug Enhertu; U.S. lawmakers passed a measure that could eat into drugmakers’ profits; and biotech shares started to rise after a miserable year — factors that may have given either company pause.

“I wouldn’t be surprised” to see the deal fall apart, said RBC Capital Markets analyst Gregory Renza, “given all these moving parts.”  


Yet the lure of new cancer drugs is strong. Branded oncology pharma sales were $143 billion in 2019, or about a fifth of all such medications globally, according to McKinsey & Co. A delay in the Merck-Seagen deal could create an opportunity for another party to swoop in, said Needham & Co. analyst Ami Fadia. 

Seagen shares, which soared after the talks were reported in June, have lost more than 13% since the beginning of July. Merck was up more than 13% this year.

Seagen declined to comment on potential deals but said it was confident in its technology. Merck didn’t respond to an emailed request for comment.

Since its 1998 founding as Seattle Genetics, Seagen has created a niche with targeted treatments called antibody-drug conjugates, or ADCs. The hybrid medicines deliver cancer-killing drugs that are so potent they would otherwise be too toxic to use, said Harold Burstein, a breast cancer specialist at Boston’s Dana-Farber Cancer Institute. 

“The biggest single advantage is that by using the antibodies, you enrich the concentration of the drug at or near the tumor,” Burstein said. “That allows you to minimize some of the side effects of the drug so that it’s not lethal to the patient, essentially.”

This “magic bullet” approach was first envisioned by Nobel Prize-winner Paul Ehrlich more than 100 years ago, and Seagen has been among pioneers making the technology dependable and effective, leading to approved drugs — although few blockbusters — for cervical cancer, lymphoma and bladder tumors.


“It’s been a long road to get here, but we’re now reaping the benefits of a lot of those learnings,” said Penelope Drake, a research executive in drug delivery leader Catalent’s biologics division, which helps drugmakers design and make ADCs. 

Widening potential and the success of ADCs like Enhertu have heightened attention. AstraZeneca and Daiichi Sankyo reported in June that Enhertu extended the lives of patients with an advanced form of breast cancer by an average of six months. Worldwide sales could peak as high as $10 billion, according to Bloomberg Intelligence, making Seagen’s missed cut of the sales more frustrating. 

“The activity of these drugs has suddenly taken off,” said Anthony Tolcher, co-founder of San Antonio-based Next Oncology, who estimates as many as 50 companies are working on ADCs.  It’s “a very competitive area.”  

Merck has already tested products in Seagen’s portfolio in combination with Keytruda, its top-selling cancer drug with more than $17 billion in 2021 sales. The U.S. drug giant is under pressure to diversify beyond Keytruda, which will go off patent in the U.S. in 2028. Chief Executive Officer Rob Davis has promised to use deals to broaden its portfolio, and Seagen’s products and pipeline are expected to bring in $7 billion a year by 2028, according to Bloomberg Intelligence. 

ADCs consist of three parts: an antibody, the chemotherapy payload and a chemical “linker” that joins them together. While the concept sounds simple, it has proven tricky to pull off in practice. The first ADC approved in the US, a leukemia treatment from Pfizer, hit the market in 2000 but was withdrawn in 2010 due to toxicity. A lower-dose version returned to the market in 2017.

Gilead Sciences spent $21 billion two years ago to acquire Immunomedics and Trodelvy, an ADC targeting breast cancer. Gilead took a $2.7 billion impairment charge in April after the drug showed only modest benefits in a trial. 


Then there was AbbVie’s ill-fated $5.8 billion deal for Stemcentrx and its ADC called Rova-T. AbbVie said in 2019 that it would write off about $4 billion after various trial failures before halting all work on the drug several months later.

“Just because you buy one of these, doesn’t mean it’s going to be a slam dunk,” Dana-Farber’s Burstein said.

By 2010, when Pfizer’s drug went off the market, most companies were losing interest, said John Lambert, a former ImmunoGen executive who’s now an independent consultant. That changed just a few months later when a Seagen ADC showed promising results in lymphoma. The next year, it was approved under the brand name Adcetris. In 2013, an ADC from Roche Holding was approved in advanced breast cancer, confirming the potential of the technology in solid tumors.

Today, about a dozen ADCs have been approved in the U.S. to treat leukemia, lymphoma and cancers of the cervix, breast and bladder. Seagen has one of the broadest and deepest ADC portfolios, with three drugs on the market and seven more in clinical trials. In addition, Roche and GSK each have a drug using Seagen’s technology and pay the biotech royalties. 

Seagen’s Padcev was approved in late 2019 for patients with advanced-stage bladder tumors who failed to respond to other treatments. In a small trial of earlier-stage patients, combining it with Keytruda led to median survival longer than two years, better than what has been historically seen with chemo. If ongoing, larger tests confirm those results, “it would be a dramatic improvement,” said Jonathan Rosenberg, a medical oncologist at Memorial Sloan Kettering Cancer Center who helped conduct the trial. 

“There’s art and science to valuing out your potential of drugs in trials as well as drugs” that are already on the market, RBC’s Renza said. The Merck-Seagen deal “is a prime example of that.”