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Merck & Co. is pushing forward with a potential deal for biotech Seagen Inc., according to people familiar with the matter, in what would be one of the largest takeovers of the year.
The Wall Street Journal reported last week that Merck was in talks to buy Seagen, which would beef up the pharmaceutical giant’s cancer-drug portfolio, but that no agreement was imminent. The talks have picked up pace and the two companies are scheduled to meet this week, some of the people said Thursday.
It couldn’t be learned whether Merck has already submitted a formal offer for the Washington state company. Other suitors were eyeing Seagen, people familiar with the matter have said, but none has surfaced yet.
If there is a deal, it would be significant, given that Seagen’s market value is well over $30 billion. The shares have risen sharply since the Journal report.
There is no guarantee the companies will reach a deal or that regulators would bless it if they do. Among the factors giving Merck pause was the potential for a heightened risk of regulatory scrutiny, the Journal reported.
New Jersey-based Merck had a market value of over $230 billion as of Thursday. Acquiring Seagen would help bolster its lineup of cancer drugs, led by the blockbuster immunotherapy Keytruda, Merck’s top-selling product with $17.2 billion in sales last year.
Seagen helped pioneer a class of cancer therapy that works like a guided missile attacking tumors with toxins. By pinpointing their hit, the therapies, called antibody drug conjugates, can maximize the treatment’s benefits while minimizing side effects by not going off target. Among Seagen’s products are Adcetris, which had $1.4 billion in sales last year.
The two companies have existing ties, including a collaboration to develop and commercialize a breast-cancer treatment. Under the agreement, Seagen and Merck have said they planned to test the experimental treatment in combination with Keytruda. Merck agreed to pay $600 million upfront to Seagen, while buying five million shares for $1 billion. Merck also licenses one of Seagen’s drugs outside of the U.S.
Seagen was previously known as Seattle Genetics. 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. The company has said he denied the allegations and informed it he was going through a divorce. Chief Medical Officer Roger Dansey has been acting as interim CEO while the company looks for a replacement.
Deal volumes globally are down roughly 20% this year after a flurry of activity last year, due to a drop in companies’ valuations, market volatility and other factors including Russia’s war in Ukraine. The largest healthcare deal to date this year in the U.S. is Pfizer Inc.’s $11.6 billion agreement to purchase the rest of Biohaven Pharmaceutical Holding Co. in May.
Write to Dana Cimilluca at [email protected], Cara Lombardo at [email protected] and Jonathan D. Rockoff at [email protected]
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Appeared in the June 24, 2022, print edition as ‘Merck Presses Ahead With Seagen.’
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