SGEN stock rises as another major pharmaceutical company is reportedly considering a takeover

Pfizer (PFE) is in initial talks to acquire a cancer specialist blessings (SGEN), according to a report that blew up SGEN shares on Monday.

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If true, it would help Pfizer expand its cancer treatment offering. Seagen pioneered the development of a class of cancer drugs known as antibody-drug conjugates, or ADCs. These drugs act like targeted torpedoes, delivering toxic chemicals to the site of the tumor and limiting damage to healthy tissue.

This is the second major pharma to reportedly have talks to acquire Seagen in less than a year. Last summer, reports suggested note (MRK) could buy Seagen for more than $200 a share. That caused SGEN stock to trade north of 180. By December, the stock had fallen to around 120.

In today’s stock market, Seagen shares are up 10.4% to close at 178.16. Pfizer shares fell 2.3% to close at 40.78.

SGEN share: Antitrust concerns?

The Talks are early and could fall apart, according to the Wall Street Journal.

“Here we go again,” Needham analyst Ami Fadia said in a report. However, she noted that potential antitrust concerns could undo any potential deal.

“Last night’s report mentions the potential for rigorous antitrust scrutiny of any proposal as one of the many hurdles that would need to be overcome,” she said. “However, we note that the direct portfolio overlap in this case is limited to bladder cancer.”

Seagen and Partners Astellas Pharma (ALPMY) do a bladder cancer treatment called Padcev. Pfizer and EMD Sereno sell another bladder cancer drug called Bavencio. Remarkably, the drugs have different mechanisms. Padcev is an ADC while Bavencio is an immuno-oncology drug.

Fadia has a Buy rating and a price target of 178 on SGEN stock.

Pfizer patents expire

For Pfizer, a deal could help stave off billions of dollars in revenue by 2030 as patents on key products expire. The company is also cash-filled due to the widespread use of its Covid vaccine and antiviral pill Paxlovid. Last year, these two products brought in sales of more than $56.7 billion.

Last year, Pfizer bought Global Blood Therapeutics for more than $5 billion and Biohaven Pharmaceutical’s migraine drugs for over $10 billion. Seagen — which had sales of $1.96 billion in 2022 — has a market cap of over $30 billion and would likely fetch a prime takeover price.

The news brought SGEN stock closer to a buy point at 183.10 from a cup basis, according to MarketSmith.com.

Pfizer and Seagen officials declined to comment in emails to Investor’s Business Daily.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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