Pfizer and Seagen have entered into a definitive merger agreement under which Pfizer will acquire Seagen for US $ 229 in cash per Seagen share for a total enterprise value of US $ 43 billion.The Boards of Directors of both companies have unanimously approved the transaction.
With Pfizer’s proposed acquisition of Seagen, the new company has the potential to deliver the next generation of cancer treatment breakthroughs using innovative cancer-fighting technology.
Ongoing collaboration with Merck & Co
The announcement comes after earlier talks between Merck & Co to buy Seagen. These talks stalled in 2022 when Merck & Co and Seagen failed to agree on a price. The acquisition by Merck & Co would have made sense for both Merck & Co and Seagen as it would have broaden Merck & Co’s cancer portfolio which largely depends the company’s anti-PD-1 mega-blockbuster pembrolizumab (Keytruda®). Approved on October 24, 2016 by the U.S. Food and Drug Administration (FDA) for treatment of patients with metastatic non‐small cell lung cancer (mNSCLC) whose tumors express programmed death‐ligand 1 (PD‐L1) as determined by an FDA‐approved test, pembrolizumab loses its patent protection in 2028. Sales of pembrolizumab accounted for $5.5 billion in fourth quarter of 2022.
Although Merck & Co was not successful in acquiring Seagen, the company still benefits from the various ongoing strategic collaborations. The largest collaboration between Merck & Co and Seagen involved a joint development in which the companies are globally developing and commercializing of ladiratuzumab vedotin, an investigational ADC targeting targeting the zinc transporter transmembrane protein LIV-1, as monotherapy and in combination with pembrolizumab in triple-negative breast cancer, hormone receptor-positive breast cancer and other LIV-1-expressing solid tumors.
Under the terms of the agreement, Seagen received a $1 billion equity investment of 5.0 million shares, roughly 3% of Seagen’s outstanding shares at a price of Us $ 200.00 per share. along with a U $600 million up-front payment and milestone payments. The agreement stipulates that in exchange, Seagen and Merck & Co split future profits on a 50-50 basis.
Separately, Seagen has granted Merck &Co an exclusive license to commercialize tucatinib (Tukysa®), a small molecule tyrosine kinase inhibitor, for the treatment of HER2-positive cancers, in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe. As part of this agreement, Seagen received a US $125 million upfront payment from Merck and is eligible for progress-dependent milestones of up to US $65 million.
Albert Bourla Ph,D., Pfizer Chairman and Chief Executive OfficerBreakthrough Benefit for Pfizer
“Pfizer is deploying its financial resources to advance the battle against cancer, a leading cause of death worldwide with a significant impact on public health,” noted Albert Bourla, Ph,D., Pfizer Chairman and Chief Executive Officer
“Together, Pfizer and Seagen seek to accelerate the next generation of cancer breakthroughs and bring new solutions to patients by combining the power of Seagen’s antibody-drug conjugate (ADC) technology with the scale and strength of Pfizer’s capabilities and expertise. Oncology continues to be the largest growth driver in global medicine, and this acquisition will enhance Pfizer’s position in this important space and contribute meaningfully to the achievement of Pfizer’s near- and long-term financial goals,” Bourla added.
Pioneering ADCs
Pfizer and Seagen are both pioneers in ADC technology.
ADCs are highly targeted biopharmaceutical drugs that combine monoclonal antibodies specific to surface antigens present on particular tumor cells with highly potent anti-cancer agents linked via a chemical linker.
With 12 FDA approved and commercially available drugs on the market, 1 approved ADC in China and a generic ADC approved in India, ADCs have become a powerful class of therapeutic agents in oncology and hematology.
Pfizer markets gemtuzumab ozogamicin (Mylotarg®) a recombinant, humanized anti-CD33 monoclonal antibody (IgG4 κ antibody hP67.6) covalently attached to the cytotoxic antitumor antibiotic calicheamicin (N-acetyl-γ-calicheamicin) via a bifunctional linker (4-(4-acetylphenoxy)butanoic acid). The drug, originally developed by Wyeth-Ayerst Laboratories was first approved in 2000. Gemtuzumab ozogamicin is approved for the the treatment of patients with relapsed or refractory CD33-positive acute myeloid leukemia (AML) who are not considered candidates for other cytotoxic chemotherapy.
Pfizer also markets inotuzumab ozogamicin , (Besponsa®; Pfizer/Wyeth) also known as CMC-544 is an antibody-drug conjugate which consists of a semi-synthetic derivative of N-acetyl ɣ-calicheamicin 1, 2-dimethyl hydrazine dichloride (NAc ɣ-calicheamicin DMH) covalently linked via an acid-labile 4-(4′-acetylphenoxy) butanoic acid (acetyl butyrate) linker to a CD22-directed humanized monoclonal IgG4 antibody, G544. The linker provides stability in physiologic pH and successful calicheamicin release inside the acidic environment of the lysosomes.
Seagen commercializes four of the twelve total FDA-approved and marketed ADCs using its technology industry-wide.
As a transformative modality antibody-drug conjugates have emerged as a powerful tool across a broad range of cancers designed to preferentially kill cancer cells and limit off-target toxicities.
Seagen has developed a leadership position in ADC technologies since its founding 25 years ago, with groundbreaking and proprietary technology that is positioned for significant growth in 2023 and beyond.
The company’s portfolio includes four approved medicines that are first- or best-in-class in their respective indications across solid tumors and hematologic malignancies, including three antibody-drug conjugates: brentuximab vedotin (Adcetris®), enfortumab vedotin (Padcev®; Seagen and Astellas), and tisotumab vedotin-tftv (Tivdak™; Seagen/GenMab; previously known as HuMax®-TF-ADC). The company also commercializes tucatinib (Tukysa®).
Clinical development programs are ongoing for each of these medicines for potential new tumor types or expanded indications in earlier lines of therapy, with catalysts expected annually through 2027.
New molecular entities
Seagen is also poised to expand the impact of its therapeutic approach with its broad and deep pipeline that includes eleven new molecular entities, many with the potential to treat large patient populations and all with global commercial rights.
The proposed acquisition is also expected to enable for combination potential across both the Seagen and Pfizer pipelines and will leverage Pfizer’s protein engineering and medicinal chemistry capabilities to advance Seagen’s ADC technology to unlock potential novel target combinations and next-generation biologics.
Innovative technologies
Seagen is also advancing innovative technologies capable of potentially generating multiple Investigational New Drug Applications (INDs), including next-generation linker/payload technologies for ADCs and other innovative antibody platforms that directly engage the immune system to destroy tumors, such as bi-specific antibodies.
“Pfizer shares our steadfast commitment to patients, and this combination is a testament to the passion, dedication and talent of the Seagen team to achieve our mission to discover, develop, and commercialize transformative cancer medicines that make a meaningful difference in people’s lives,” said David Epstein, Seagen Chief Executive Officer.
“The proposed combination with Pfizer is the right next step for Seagen to further its strategy, and 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.”
Revenue
Seagen expects to generate approximately $2.2 billion of revenue in 2023, representing 12% year-over-year growth, from its four in-line medicines, royalties and collaboration and license agreements. When combining the expected strong growth trajectories for these medicines with candidates that could emerge from Seagen’s pipeline, subject to clinical trial and regulatory success, Pfizer believes Seagen could contribute more than $10 billion in risk-adjusted revenues in 2030, with potential significant growth beyond 2030.
In turn, Pfizer Oncology has an industry-leading portfolio of 24 approved innovative cancer medicines that generated $12.1 billion in 2022 revenues, including the best-selling therapies for metastatic breast cancer and prostate cancer.
Pfizer’s in-line portfolio is focused on four broad, key areas: breast cancer, genitourinary cancer, hematology and precision medicine, complemented by an extensive pipeline of 33 programs in clinical development. The proposed combination with Seagen would double Pfizer’s early-stage oncology clinical pipeline.
“Over the past decade we’ve taken bold new approaches to translating scientific research into effective medicines for people living with cancer, and we have pioneered several breakthroughs in breast cancer, genitourinary cancer, hematological malignancies and precision medicine,” noted Chris Boshoff, Chief Development Officer Oncology and Rare Disease, Pfizer.
Legal complications
Between 2008 Seagen and Daiichi Sankyo entered into an exclusive, worldwide collaboration agreement to develop of antibody-drug conjugates targeting a single antigen found on multiple types of solid tumors. As part of the agreement, Seagen granted Daiichi Sankyo a license to use its linker/payload technology in the development of novel ADCs.
The agreement between the companies ended in 2015. However, but Daiichi Sankyo continued developing its own ADCs, based on independently developed technologies. This separate research resulted in the development of [fam-] trastuzumab deruxtecan (Enhertu®; Daiichi Sankyo and AstraZeneca) and an agreement with AstraZeneca to jointly develop and commercialize Daiichi Sankyo’s ADCs.
In November 2019, Daiichi Sankyo filed a ‘Declaratory Judgment’ action in the District Court of Delaware against Seagen. This action was a response to claims made by Seagen that the payload/linker technology used in trastuzumab deruxtecan and other ADCs being developed by Daiichi Sankyo were merely ‘improvements’ to technology Seagen owns and licensed to Daiichi Sankyo as part of the 2008 agreement, making Seagen the rightful owner of this key intellectual property.
In late April 2022 a jury in the U.S. District Court for the Eastern District of Texas found that Daiichi Sankyo infringed Seagen’s U.S. Patent No. 10,808,039 (the ’039 patent) by selling trastuzumab deruxtecan in the United States. Seagen was awarded damages of $41.82 million for past infringement of the patent, but missed out on future royalties of trastuzumab deruxtecan, estimated at $10 billion blockbuster. The courts ruled in favor of Daiichi Sankyo, citing statute of limitations and disagreement with Seagen on the interpretation of the contract.
In a related matter, on December 23, 2020, Daiichi Sankyo filed a petition with the U.S. PTO for post-grant review contesting the patentability of claims made in Seagen’s U.S. ’039 patent.
On April 7, 2022, the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office granted Daiichi Sankyo’s request on rehearing and instituted two post grant review (PGR) proceedings brought against claims made in Seagen’s U.S. ’039 patent. The PTO initiated post-grant review of the ’039 patent to determine whether the claims of that patent should not have originally been granted and on July 15, 2022, the U.S. PTO granted Seagen’s request for rehearing of the decision to institute post-grant review, deciding not to proceed with the PGR process.
On February 7, 2023, a PTO Precedential Opinion Panel issued an order instructing the original PGR panel to decide whether the PGR should be reinstituted by applying the applicable standard of whether Daiichi Sankyo’s petition presented compelling evidence of unpatentability of the ’039 patent.
In statements made, Seagen said that it intends to vigorously defend its patent in the PGRs.
Innovative cancer care
“The addition of Seagen’s world-leading ADC technology will position us at the forefront of innovative cancer care, and strongly complements our existing portfolio across both solid tumors and hematologic malignancies. We believe the combination of our teams, and respective areas of strength and global footprints will allow us to realize Seagen’s potential and advance even more potential breakthroughs to patients with cancer,” Boshoff added.
Financing strategy
Pfizer expects to finance the transaction substantially through $31 billion of new, long-term debt, and the balance from a combination of short-term financing and existing cash. The transaction is expected to be neutral to slightly accretive to adjusted diluted earnings per share (EPS) in the third to fourth full year post close. Pfizer expects to achieve nearly $1 billion in cost efficiencies in the third full year after the completion of the transaction.
The companies expect to complete the transaction in late 2023 or early 2024, subject to fulfillment of customary closing conditions, including approval of Seagen’s stockholders and receipt of required regulatory approvals.
Pfizer’s financial advisor for the transaction is Guggenheim Securities, LLC, with Wachtell, Lipton, Rosen & Katz acting as Pfizer’s legal advisor. Centerview Partners LLC is serving as Seagen’s financial advisor and provided a fairness opinion to Seagen’s Board of Directors with Sullivan & Cromwell LLP serving as its legal advisor. MTS Health Partners also provided financial advice to Seagen.
Other Mergers and acquisitions
While antibody-drug conjugates offer great potential, on the business side, mergers between companies involved in the development and manufacturing of ADCs have only yielded mixed results. For example, AbbVie’s purchase of Stemcentrx and its lead late-stage asset rovalpituzumab tesirine (Rova-T) in 2016 proofed to be a disappointment for AbbVie, when the company was forced to halt the Rova-T trial due to a shorter overall survival observed in the Rova-T arm. The study failure forced AbbVie to write off about US $4 billion of the approximately $5.8 billion in cash and stock to acquire Stemcentrx.
Another acquisition, Gilead Sciences’ US $21 billion acquisition of Immunomedics and the company’s lead drug sacituzumab govitecan-hziy (Trodelvy®), did, according to analysts not justify the sticker price. Analysts believed that sacituzumab govitecan-hziy would need to be included in earlier lines of treatment in multiple tumor types. Their initial skepticism has since changed in a more possessive assessment of Gilead’s acquisition following positive results of the the treatment presented during the
The humanized Trop-2 IgG1 kappa antibody, coupled to the topoisomerase inhibitor SN-38 through a proprietary hydrolysable linker, is a first-in-class antibody-drug conjugate which was granted accelerated approval in April 2021, is expected to transform the treatment of metastatic triple negative breast cancer (mTNBC). In addition to TNBC, sacituzumab govitecan-hziy is also in development in non-small cell lung cancer.
Because effective treatment options are extremely limited for mTNBC, the strong data in this setting suggest that sacituzumab govitecan-hziy will, most likely, be quickly integrated into standard of care and, as a result, transform the treatment of this disease.
Highlights of prescribing information
Brentuximab vedotin (Adcetris®; Seagen) [Prescription information]
Enfortumab vedotin (Padcev®; Seagen and Astellas)[Prescription information]
Tisotumab vedotin-tftv (Tivdak™; Seagen/GenMab)[Prescription information]
Tucatinib (Tukysa®) [Prescription information]
Gemtuzumab ozogamicin (Mylotarg®; Pfizer/Wyeth)[Prescription information]
Inotuzumab ozogamicin , (Besponsa®; Pfizer/Wyeth)[Prescription information]
This article was updated on Match 14, 2023
