Pfizer Buys 'Goose That Is Laying the Golden Eggs'

It's not Pfizer's priciest acquisition by a long shot, but the numbers are staggering anyway: The pharma giant will pay $43 billion in cash for Seagen, a cancer biotech company that has yet to be profitable. What you need to know:

• What Seagen does. The Washington-based company uses antibody-drug conjugate, or ADC, technology that hunts down tumors and delivers a cancer-killing drug while sparing healthy tissue. The Washington Post reports Seagen has secured regulatory approval for drugs that treat Hodgkin lymphoma and bladder, cervical, and breast cancer. It has lung and advanced breast cancer treatments in development.
• Its finances. It had revenues of $2 billion in 2022, but $610 million in losses. It's projecting 12% revenue growth this year, and Pfizer expects to be pulling in $10 billion from ADCs by 2030.
• Key quote. "We are not buying the golden eggs. We are acquiring the goose that is laying the golden eggs," said Pfizer CEO Albert Bourla in a Monday investors call, per Quartz.

• Driving the purchase. Az Quartz explains, Pfizer is cash rich thanks to the roughly $70 billion it made off COVID-19 vaccines in the past two years, but it's on a bit of a precipice, with looming patent expirations on some of the big drugs in its portfolio (the Wall Street Journal reports that as 2030 nears, about $17 billion in revenue will be at risk). The company is prioritizing cancer treatments, which it made $12 billion from last year, but it only has a couple of first-generation ADC treatments to its name, per the AP. "We think this really changes dramatically the oncology presence of Pfizer, makes it one of a kind," Bourla said.
• One take. Sure, Pfizer overpaid, writes David Wainer for the Journal, but it's a "seller's market in biotech," thanks in part to the "diminishing list of desirable biotechs" and the fact that other pharma companies are in Pfizer's shoes: "About $200 billion in sales is going off patent this decade." In his view, it makes sense that Pfizer is emerging as "one of the most aggressive deal makers," citing those strong COVID earnings but also the patent cliff and waning COVID market. Its shares have dropped roughly 20% over the past 12 months.

(More Pfizer stories.)