Merck nears Seagen takeover: ‘question is how does FTC look at this?’

By:
on Jul 7, 2022
  • WSJ report says Merck & Co is in advanced talks to buy Seagen Inc.
  • It's willing to pay more than $200 a share for the cancer drug specialist.
  • Dr Scott Gottlieb reacts to the news on CNBC's "Squawk Box".

Shares of Seagen Inc (NASDAQ: SGEN) are up 3.0% this morning on a report that Merck & Co Inc (NYSE: MRK) is in advanced talks to buy the cancer drug specialist for at least $40 billion.

Dr Gottlieb reacts to the news

According to the Wall Street Journal, the pharma giant is willing to pay over $200 a share for Seagen – a more than 10% premium on its current stock price.

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Reacting to the news this morning on CNBC’s “Squawk Box”, former FDA commissioner, Dr Scott Gottlieb said the deal, if announced, was likely to face antitrust scrutiny.

The big question is how does FTC look at this? This is the first deal of its kind in bio-pharma under this new FTC [that’s been] a lot more aggressive. The question is, what will they force the two companies to divest to get this deal done.

Merck is in the red on Thursday.

What’s in it for Merck & Co?

Merck might be looking at the biotech firm as a potential source of revenue that replaces Keytruda (cancer treatment) once its patent exclusivity expires in 2028. As per Narumi Nakagiri – Analyst at Daiwa Capital Markets:

Biosimilars could enter the market from 2028 onward, which poses a potential turning point for Keytruda given that it continues to generate sales growth. With Keytruda markets attractive, we expect many firms to attempt development of biosimilars.

Keytruda brought in $4.8 billion in the latest reported quarter; a 23% YoY increase that helped Merck report better-than-expected earnings for its fiscal Q1 and give upbeat full-year guidance.

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