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The agreement was disseminated at Pfizer’s (New York Stock Exchange: PFE) The planned $43 billion purchase of Pfizer (PFE) is attractive as investors see decent upside potential from current levels, according to an Oppenheimer analyst.
Seen (NASDAQ: SGEN) is currently trading at $202.47, while the deal he struck with Pfizer (PFE), is at $229 per share, which is a 12% upside. The difference in the spread represents investor concerns about the deal closing, especially antitrust concerns about the combination.
Merck KGaA’s (OTCPK:MKGAF) announcement on Monday that it had regained exclusive global rights for bladder cancer Bavencio (avelumab) after the termination of the collaboration agreement with Pfizer (PFE), is likely an indication of Merck’s commitment to Pfizer (PFE) to get the Seagen (SGEN) deal done, according to Oppenheimer analyst Jay Olson.
“We view these developments as an indication of PFE’s proactive planning to head off potential antitrust concerns arising from the recently announced $43 billion PFE/SGEN M&A deal,” wrote Olson, who is top-rated at Seage ( SGEN), in a note on Monday. .
With the termination of the agreement, Pfizer (PFE) returned the worldwide rights to develop, manufacture and market the bladder cancer treatment, replacing its current profit share with a 15% royalty on sales.
Olson noted that the cancer drug Bavencio only added $72 million to Pfizer’s (PFE) total $3 billion cancer franchise in the fourth quarter, although it can be seen as overlapping with Seagen’s Padcev (SGEN).
“Other than Bavencio, we don’t see any obvious assets as potentially worrisome from regulatory perspectives as we remain optimistic about the deal closing,” Olson added. “We don’t see any notable overlap between PFE/SGEN’s core businesses from regulatory perspectives, and we believe early-stage overlaps can be further sold.”
Olson also noted that Amgen (AMGN) recently highlighted at the Oppenheimer Health conference its confidence in closing its $28 billion acquisition of Horizon Therapeutics (HZNP) in the first half of this year, which is likely to be a positive read for SGEN. /PFE. deal in the short term.
Last month, Pfizer (PFE) CEO Albert Bourla said he does not expect antitrust concerns to be an obstacle to the company’s planned $43 billion acquisition of Seagen (SGEN).
“I anticipate very high scrutiny, but I anticipate zero issues,” Bourla said in a Bloomberg television interview. “You can’t find a cleaner merger in terms of antitrust.”
M&A investors also got some positive antitrust news recently as CVS Health (CVS) planned to purchase Oak Street Health (OSH) for ~$10.6 billion passed an antitrust deadline and CVS’s acquisition of Signify Health for $8 billion closed last week.
