Biopharma giant Merck is considering an acquisition of Seagen, the largest biotech company in the Seattle area, according to a report in the Wall Street Journal Friday.
The Journal reported that “talks have been going on for some time and that a deal is not imminent”.
A Seagen spokesperson declined to comment on the report.
From Seagen’s point of view, an acquisition “could make world sense,” said William Canestaro, director of the Washington Research Foundation, who said the report surprised him.
“Merck would bring processes, systems and proven expertise to bring drugs to market,” Canestaro told GeekWire. “In addition, with the current leadership turmoil, an acquisition now seems particularly appropriate.”
Clay Siegall, a longtime CEO who co-founded the company more than 24 years ago, resigned in May after allegations of domestic violence, which he denies, and an incident at his home where he was arrested. Chief medical officer Roger Dansey is acting CEO.
Seagen, based in Bothell, Washington, employs more than 2,800 people in the Seattle area, Canada and Europe. Seagen’s stock value rose more than 11% at market close on Friday, bringing the company’s market value to more than $30 billion. Merck shares fell slightly.
Seagen brought in $1.6 billion in revenue last year and $426.5 million in the first quarter of 2022, compared to $332 million a year ago. The company has four oncology drugs on the market and a pipeline of other candidates focused on antibody-drug conjugates (ADCs), which target cells using an antibody and release a toxin to kill the cells.
Seagen and Merck partnered in 2020 to develop and market an ADC for breast and other solid tumors as monotherapy and in combination with Merck’s Keytruda. Under that agreement, Merck made a $1 billion investment in Seagen and paid $600 million upfront.
Other companies are “looking at Seagen as well,” the Journal reported.
Siegall’s resignation came shortly after the company announced it will build a 270,000-square-foot manufacturing facility north of Seattle. The company has become a major biotech anchor tenant for the region, which suffered the loss of Amgen in 2016, years after its acquisition of Immunex.
Seagen and Bristol Myers Squibb are the largest biopharma employers in the Seattle area.
“Seagen has been a hugely important part of our local biotech ecosystem,” said Canestaro. “With any acquisitions, questions naturally arise as to whether this will look more like an Immunex acquisition or a Juno acquisition.”
Bristol Myers Squibb acquired the Juno Therapeutics pipeline through its acquisition of Celgene in 2018, and continues to grow in the region, in part due to access to cell therapy expertise.
“Biologics and ADC expertise would be easier to find in other parts of the country, so it’s unlikely Seagen would maintain the same local footprint if it were acquired,” Canestaro added. “But COVID has fundamentally changed the way Seagen operates; many of their staff are now completely remote or hybrid. Location may not be so important these days.”