The drug makers are in acquisition talks, but there is no recorded offer yet and no agreement has been made public.
One of the most talked about pharma deals this past week may never actually happen, according to experts.
Merck & Co. is looking to buy Seattle-based Seagen to expand its cancer portfolio, which would represent the biggest deal of the year so far. Seagen’s work in antibody drug conjugates has a market value of over $30 billion, with its shares rising 16% at the news of Merck's interest in the acquisition.
According to the Wall Street Journal and others, Merck is in talks with Seagen, but there is no recorded offer yet and no agreement has been made public. However, the two companies are scheduled to meet this week to further discussions.
The two companies have worked together in the past developing a new breast-cancer treatment. They plan to test the experimental treatment in combination with Keytruda. Two years ago, Merck agreed to pay $600 million upfront to Seagen, while buying five million shares for $1 billion.
With the patent for Keytruda, a $17 billion drug, expiring in 2028, this is a tactical time for Merck to expand its cancer treatment pipeline.
The new acquisition makes strategic sense for both companies, but analysts fear it may be too big to pass the increased regulatory scrutiny stemming from a FTC/DOJ Pharmaceutical Task Force that is suggesting a tougher approach to evaluating mergers.
The FTC/DOJ task force held a workshop in early June, and at that meeting FTC Commissioner Rebecca Kelly Slaughter noted that although the immediate agenda of the task force was complete, the group would continue to work with the FTC "on both specific cases and general approaches, keeping our ideas fresh and reflective of market realities."
"Going forward, our individual enforcement and policy work can inform each other’s agendas," she said in her keynote address. "I have no doubt the knowledge the FTC will gain will help better inform our pharmaceutical merger investigations."
Just two days after the workshop concluded, the Wall Street Journal reported that Merck may be looking to acquire Seagen. According to the same report, however, analysts were doubtful the merger would pass regulatory requirements. Experts predict the two may continue as marketing collaborators.
Seagen was previously known as Seattle Genetics. In April, it announced plans for a manufacturing facility to help provide “greater control and flexibility” over the production of its cancer medicines based in Washington state. Its co-founder Clay Siegall resigned as chief executive and chairman in May as the company was investigating his conduct following an allegation of domestic violence.
If Merck does step up to the plate to buy the biopharma, the merger will be a test of the new FTC attitude towards mergers, as well as a threat to other companies in the oncology space.
Robin Robinson is a contributing writer for HealthLeaders.
KEY TAKEAWAYS
The two companies have worked together in the past developing a new breast-cancer treatment.
They plan to test the experimental treatment in combination with Keytruda.
Two years ago, Merck agreed to pay $600 million upfront to Seagen, while buying five million shares for $1 billion.
With the patent for Keytruda, a $17 billion drug, expiring in 2028, this is a tactical time for Merck to expand its cancer treatment pipeline.
The new acquisition makes strategic sense for both companies, but analysts fear it may be too big to pass the increased regulatory scrutiny stemming from a FTC/DOJ Pharmaceutical Task Force.