FTC asks Pfizer, Seagen for more information on proposed $43B merger

The Federal Trade Commission (FTC) has asked Pfizer and Seagen for more information on their proposed $43 billion merger, the Seattle biotech revealed (PDF) in a Securities and Exchange Comission (SEC) filing Friday.

This is the second round of documentation the antitrust regulator has requested from the companies since their deal was announced in March.

"Second requests require both parties to provide additional information to assess the legality of the transaction, though they can be broad in nature, investigating issues such as existing or potential competition, drug pricing or off-label usage of certain products," SVB Securities wrote in a note to investors.

Second requests from the FTC come in roughly 25% of merger and acquisition deals, with the regulator challenging a transaction 5% to 10% of the time, MEDACorp told SVB, adding that a second request can extend the timeline for review by six to nine months.

Seagen added in the filing that it still expects the acquisition to be complete “by late 2023 or early 2024.”

Scrutiny of the deal comes as no surprise considering the FTC filed a lawsuit in May to block Amgen’s proposed $27.8 billion buyout of Horizon. That case that will be heard in September.

Last month, Goldman Sachs analyst Chris Shibutani, M.D.—based on a conversation with Pfizer Chief Financial Officer Dave Denton—wrote that the company expected the request, even though “no red flags have cropped up,” on the acquisition.

A month ago, Pfizer revealed in an SEC filing that it had withdrawn its notification for the buyout of Seagen and would refile it later in the day. The move extended the FTC’s review of the deal by 30 days to Friday of last week.

Seagen also said in its filing that it referred the merger with Pfizer to the European Commission for review June 1, and that approval is necessary for the deal to close.

SVB mentioned that undergoing a European review is standard procedure for larger mergers, although the bloc is also scrutinizing biopharma M&A more rigorously. Last week, the EU fined Illumina a record 432 million euros ($476 million) for hastening its $7 billion acquisition of Grail without gaining regulatory approval. The EU is expected to follow the FTC in ordering Illumina to fully divest Grail.

The Pfizer-Seagen merger is the largest M&A deal in biopharma since AbbVie acquired Allergan for $63 billion in June of 2019. It would give Pfizer four approved products and a deep pipeline of antibody-drug conjugate candidates. Pfizer said it expects the products brought by Seagen to bring $10 billion in additional annual revenues by 2030.

Pfizer had two of the three largest deals in the industry last year. In May, Pfizer executed an $11.6 billion buyout of migraine pioneer Biohaven. Three months later, the New York giant paid $5.4 billion, outbidding Johnson & Johnson, for sickle cell specialist Global Blood Therapeutics.

While the FTC's attempt to block the Amgen-Horizon deal—it's first such move against a biopharma company in more than a decade—raises concern for Pfizer's buyout of Seagen, some analysts believe there is little overlap between the companies that would justify a similar lawsuit.

In its suit, the FTC has cited Amgen’s history of enhancing the monopoly positions of its drugs through product bundling and rebate schemes. This ability to exploit the market could be enhanced with therapies that Amgen would gain through an acquisition of Horizon, the FTC has argued.