In Pfizer's $43B acquisition of Seagen, the biotech's patience paid off

In May of last year, after Seagen rejected Merck’s offer to acquire it for $230 per share, the Seattle biotech saw its value tumble. Just three months later, Merck’s offer had dropped to $195 per share.

But playing the waiting game—and courting another global pharmaceutical powerhouse—worked out favorably for Seagen.

Pfizer’s acquisition last month of the cancer specialist got Seagen close to its original asking price. The $43 billion deal works out to $229 per share.

In a Schedule 14A filing with the Securities and Exchange Commission, Seagen gave (PDF) a blow-by-blow account of negotiations over its sale, which were waged over three years.

The first time Seagen discussed a potential selloff, according to the filing, came in December 2019 when the company was known as Seattle Genetics. Over the next three months, Company ‘A,’ as it is identified in the filing (presumably Merck), offered a sale price of $200 per share to acquire the company.

During this period, Seagen’s share price was between $90.57 and $124.32. But the company insisted throughout that the price was inadequate and talks broke off.

Meanwhile, Seagen continued to thrive. Later in the year, the company partnered with Merck in a $1.6 billion licensing deal to develop ladiratuzumab vedotin, an agent to pair with the New Jersey company’s mega-blockbuster cancer treatment Keytruda.

In February of 2022, Seagen and Merck were back in discussions over a potential merger. The biotech was seeking a price in the range of $235 to $245 per share. In May of 2022, the pharma giant offered $230 per share.

Seagen was in turmoil at the time, reeling after the domestic abuse arrest of CEO and co-founder Clay Siegall, leaving board member Dr. Felix Baker to take over negotiations.

When Siegall resigned on May 15, two other companies jumped into the fray. An offer by Company ‘B’ was rejected as the deal would have been mostly in stock, leaving Seagen’s shareholders in majority control of the combined company.

Company ‘C’ was in better financial position but its deal also would include stock. Seagen rejected an offer but kept the door open for future discussion.

It was during this time that Seagen reached out to Pfizer and another “global biopharmaceutical company,” it said in its filing. Pfizer CEO Albert Bourla was interested from the start. A day after initial contact, he requested a formal presentation from Seagen, which happened five days later, on May 25.

On June 1, Pfizer said it could offer between $210 and $220 per share. Seagen said it wanted more, indicating to Pfizer it wanted to keep negotiating.

On June 10, Company ‘D’ offered just $200 per share and was rejected.

By that time, Seagen had already concluded that Company ‘A’ (Merck) and Pfizer were the only firms in the mix. But when Seagen went back to Pfizer on June 13, the company said it would not provide an updated proposal.  

Over the next several weeks, The Wall Street Journal reported on multiple occasions about an impending deal involving Merck and Seagen.  

But in August, a potential sale was harpooned when Merck came up with an offer of just $195 per share. A day later, the company indicated it could potentially move the bid up to $210. Pfizer then told Seagen that it could no longer get its offer in the $210 to $220 range.  

On Sept. 21, Merck told Seagen it was no longer interested in making a deal.

Seagen appeared set to continue on its own when it hired Novartis oncology veteran David Epstein to take over as CEO in November.

In January however—after a period in which Seagen had scored regulatory and trial victories—Bourla sent an email to Baker, indicating his renewed interest and willingness to consider an offer in the $210 to $220 price-per-share range. Over the next several weeks, Seagen worked Pfizer up to its desired price.