USA – Merck & Co. is in advanced talks to acquire Seagen Inc. and could reach an agreement as soon as this month for around US$40bn, the Wall Street Journal has reported citing people privy to the matter.

If Merck eventually buys Seagen for US$40 billion, it would be the largest biopharma transaction involving a drugmaker in about three years after AbbVie’s June 2019 announcement to purchase Allergan for US$63 billion —unless antitrust regulators intervene.

The buyout, if finalized, would also be the first biopharma deal of this scale under the current US Federal Trade Commission (FTC).

The now antitrust watchdog has threatened to crack down on large pharma M&A deals, and that could be a hurdle for Merck and Seagen.

However, if the acquisition is finalized, it would edge out AstraZeneca’s US$39 billion acquisition of rare disease specialist Alexion last year.

Additionally, it it would be much larger than Gilead Sciences’ US$21 billion takeover of fellow ADC player Immunomedics in 2020.

According to Wall Street Journal’s sources, the estimated price will be over US$200 per share and the companies expect to close the deal before the publication of Merck’s accounting report on July 28.

That amount would represent a roughly 14 percent premium to Seagen’s last closing price and translate into a valuation of US$37 billion or more, data compiled by Bloomberg show.

Merck has been studying Seagen’s books in recent weeks and aims to announce a deal leading into its own earnings, according to the person, who asked not to be identified discussing confidential information.

If Merck eventually buys Seagen for US$40 billion, it would be the largest biopharma transaction involving a drugmaker in about three years after AbbVie’s June 2019 announcement to purchase Allergan for US$63 billion —unless antitrust regulators intervene.

While negotiations are at advanced stage, they may still be delayed or falter, the people said. A representative for Seagen declined to comment, while a spokesperson for Merck didn’t immediately respond to a request for comment,

Founded in 1998, Bothell, Washington-based Seagen develops cancer therapies using antibody conjugate and sugar-engineered antibody technologies, according to its website.

Its shares have risen about 13 percent in New York this year, giving the company a market value of about US$32 billion.

Merck has faced investor pressure to diversify beyond the cancer drug Keytruda, which is its most profitable medication and will face cheaper competition starting in 2028.

It is among several companies that have been on the hunt for future blockbuster drugs through acquisitions, including Sanofi, Pfizer Inc., Amgen Inc., Gilead Sciences Inc. and Roche Holding AG.

Last year, Merck bought Acceleron Pharma Inc. for about US$11 billion. Acceleron’s pipeline focuses on a particular type of protein that plays a central role in the regulation of cell growth, differentiation and repair.

The company’s main candidate is a pulmonary arterial hypertension drug called Sotatercept, which is in late-stage development.

Seagen’s stock reached an all-time high of about US$212 back in the fall of 2020 shortly after Merck signed up for the Seattle biotech’s LIV-1-targeting antibody-drug conjugates (ADCs) and made an investment of US$1 billion for 5 million Seagen shares.

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