Why Big Drugmakers Want to Buy Cancer Biotech Seagen
An unprofitable biotech that pioneered a relatively new kind of cancer therapy has caught the attention of the world’s largest drugmakers on the hunt for the next big opportunity in one of the industry’s most lucrative markets.
Seagen Inc.
sells three of the novel cancer agents—known as antibody drug conjugates, or ADCs—that work like a guided missile attacking tumors with toxins. Although the company’s products generate around $2 billion in yearly sales and the company operates at a loss, it has a market valuation of roughly $30 billion.
Pfizer Inc.
has had early-stage discussions about buying Seagen, The Wall Street Journal recently reported, after
Merck
& Co. got close to acquiring the biotech last year before failing to reach an agreement.
The talks inject a fresh round of uncertainty for Seagen, after co-founder
Clay Siegall
resigned as chief executive and chairman last year as the company was investigating an allegation of domestic violence. Seagen said he denied the allegations and told the company he was going through a divorce.
A takeout is far from certain.
David Epstein,
a former
Novartis AG
pharmaceuticals executive, took the helm of Seagen in November and has been taking an independent tack. In recent weeks, he outlined plans to build a leading global cancer company by expanding the reach of its products, bolstering its commercial work and doing deals of its own.
Merck got close to acquiring Seagen last year, but the two companies didn’t reach an agreement.
Photo:
Hannah Yoon for The Wall Street Journal
“They’re not dying to get taken out—unless the price is very, very attractive” because they believe they are in a good position to grow, said Andy Hsieh, an analyst at William Blair & Co. Seagen declined to comment and to make Mr. Epstein available for comment.
Driving the acquisition interest in the company, according to analysts, is the potential for ADCs to capture a chunk of the worldwide cancer market. ADCs will account for $31 billion of the $375 billion market in 2028, drug-market-research firm Evaluate estimates.
The revenue could cushion big drugmakers who face patent expirations on key products in coming years.
ADCs have started to win approval for some common cancers. Researchers have reported positive but preliminary findings in lung cancer, another common tumor type.
Meantime, drugmakers have considered combining the ADCs with widely used cancer agents like immunotherapies, which are among the biggest-selling cancer treatments today.
“When you get it right and the planets align you get a really awesome product,” said Asthika Goonewardene, an analyst at Truist Securities.
The alignment began to emerge several years ago, after Seagen and other ADC biotechs improved the technology. ADCs link an antibody that can home in on a tumor target with a toxic agent such as chemotherapy. After the antibody finds the targeted tumor, the toxic agent deploys against it.
The companies fine-tuned how the therapies link an antibody to a toxin and then release the toxic payload, Mr. Goonewardene said. Such technical advances made developing ADCs more effective and opened up exploring various potential applications.
Big drugmakers took notice. In 2019,
AstraZeneca
PLC agreed to pay
Daiichi Sankyo Co.
up to $6.9 billion for shared rights to an ADC drug called Enhertu. In 2020,
Gilead Sciences Inc.
paid $21 billion for an ADC company named Immunomedics.
There were 39 licensing deals involving ADCs last year, roughly twice as many as in the previous year, Mr. Goonewardene said.
Enhertu received U.S. regulatory approval last year as a treatment for HER2-low breast cancer.
Photo:
Daiichi Sankyo, AstraZeneca/Associated Press
Enhertu confirmed the potential of the drugs last June, when researchers reported it cut the rate of death in women with a type of advanced breast cancer known as HER2-low by one-third. Most significantly, the drug worked in subjects who hadn’t responded well to older, effective treatments.
The Food and Drug Administration approved Enhertu for the HER2-low breast cancer last August, four months ahead of schedule.
Seagen, which is located in a Seattle suburb and was previously known as Seattle Genetics, was founded in 1998 to advance ADCs. Its lymphoma treatment, Adcetris, was the second ADC approved, in 2011. In 2019, the FDA approved Padcev, an ADC from Seagen and
Astellas Pharma Inc.,
for treating bladder cancer patients who had failed other drugs.
SHARE YOUR THOUGHTS
What is your outlook on Seagen? Join the conversation below.
The biotech has more than nine studies evaluating its ADCs with immunotherapies under way.
The FDA is reviewing a regimen combining Padcev with Merck’s Keytruda immunotherapy for treatment of advanced bladder cancer in patients who are ineligible for chemotherapy.
Analysts also are expecting late-stage results from a separate study to show whether the combination works in bladder-cancer patients who haven’t received earlier treatments.
The combination may prove “better than just giving either of the drugs by themselves,” said
SVB Securities
LLC analyst Andrew Berens, who estimates Padcev could total $4 billion in sales in 2030.
The company is also developing next-generation conjugates, including one that showed promise against lung tumors in an early-stage study.
Write to Jared S. Hopkins at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
An unprofitable biotech that pioneered a relatively new kind of cancer therapy has caught the attention of the world’s largest drugmakers on the hunt for the next big opportunity in one of the industry’s most lucrative markets.
Seagen Inc.
sells three of the novel cancer agents—known as antibody drug conjugates, or ADCs—that work like a guided missile attacking tumors with toxins. Although the company’s products generate around $2 billion in yearly sales and the company operates at a loss, it has a market valuation of roughly $30 billion.
Pfizer Inc.
has had early-stage discussions about buying Seagen, The Wall Street Journal recently reported, after
Merck
& Co. got close to acquiring the biotech last year before failing to reach an agreement.
The talks inject a fresh round of uncertainty for Seagen, after co-founder
Clay Siegall
resigned as chief executive and chairman last year as the company was investigating an allegation of domestic violence. Seagen said he denied the allegations and told the company he was going through a divorce.
A takeout is far from certain.
David Epstein,
a former
Novartis AG
pharmaceuticals executive, took the helm of Seagen in November and has been taking an independent tack. In recent weeks, he outlined plans to build a leading global cancer company by expanding the reach of its products, bolstering its commercial work and doing deals of its own.
Merck got close to acquiring Seagen last year, but the two companies didn’t reach an agreement.
Photo:
Hannah Yoon for The Wall Street Journal
“They’re not dying to get taken out—unless the price is very, very attractive” because they believe they are in a good position to grow, said Andy Hsieh, an analyst at William Blair & Co. Seagen declined to comment and to make Mr. Epstein available for comment.
Driving the acquisition interest in the company, according to analysts, is the potential for ADCs to capture a chunk of the worldwide cancer market. ADCs will account for $31 billion of the $375 billion market in 2028, drug-market-research firm Evaluate estimates.
The revenue could cushion big drugmakers who face patent expirations on key products in coming years.
ADCs have started to win approval for some common cancers. Researchers have reported positive but preliminary findings in lung cancer, another common tumor type.
Meantime, drugmakers have considered combining the ADCs with widely used cancer agents like immunotherapies, which are among the biggest-selling cancer treatments today.
“When you get it right and the planets align you get a really awesome product,” said Asthika Goonewardene, an analyst at Truist Securities.
The alignment began to emerge several years ago, after Seagen and other ADC biotechs improved the technology. ADCs link an antibody that can home in on a tumor target with a toxic agent such as chemotherapy. After the antibody finds the targeted tumor, the toxic agent deploys against it.
The companies fine-tuned how the therapies link an antibody to a toxin and then release the toxic payload, Mr. Goonewardene said. Such technical advances made developing ADCs more effective and opened up exploring various potential applications.
Big drugmakers took notice. In 2019,
AstraZeneca
PLC agreed to pay
Daiichi Sankyo Co.
up to $6.9 billion for shared rights to an ADC drug called Enhertu. In 2020,
Gilead Sciences Inc.
paid $21 billion for an ADC company named Immunomedics.
There were 39 licensing deals involving ADCs last year, roughly twice as many as in the previous year, Mr. Goonewardene said.
Enhertu received U.S. regulatory approval last year as a treatment for HER2-low breast cancer.
Photo:
Daiichi Sankyo, AstraZeneca/Associated Press
Enhertu confirmed the potential of the drugs last June, when researchers reported it cut the rate of death in women with a type of advanced breast cancer known as HER2-low by one-third. Most significantly, the drug worked in subjects who hadn’t responded well to older, effective treatments.
The Food and Drug Administration approved Enhertu for the HER2-low breast cancer last August, four months ahead of schedule.
Seagen, which is located in a Seattle suburb and was previously known as Seattle Genetics, was founded in 1998 to advance ADCs. Its lymphoma treatment, Adcetris, was the second ADC approved, in 2011. In 2019, the FDA approved Padcev, an ADC from Seagen and
Astellas Pharma Inc.,
for treating bladder cancer patients who had failed other drugs.
SHARE YOUR THOUGHTS
What is your outlook on Seagen? Join the conversation below.
The biotech has more than nine studies evaluating its ADCs with immunotherapies under way.
The FDA is reviewing a regimen combining Padcev with Merck’s Keytruda immunotherapy for treatment of advanced bladder cancer in patients who are ineligible for chemotherapy.
Analysts also are expecting late-stage results from a separate study to show whether the combination works in bladder-cancer patients who haven’t received earlier treatments.
The combination may prove “better than just giving either of the drugs by themselves,” said
SVB Securities
LLC analyst Andrew Berens, who estimates Padcev could total $4 billion in sales in 2030.
The company is also developing next-generation conjugates, including one that showed promise against lung tumors in an early-stage study.
Write to Jared S. Hopkins at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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