USA — The Federal Trade Commission (FTC) has extended its review period for Pfizer’s proposed acquisition of cancer drug developer Seagen, adding four more weeks of anticipation for investors awaiting the agency’s decision on the US$43 billion deal.
Pfizer has withdrawn its merger notification paperwork but intends to refile it on Wednesday, according to a regulatory notice from Seagen.
Pfizer and Seagen are subject to the Hart-Scott-Rodino Act, which requires companies involved in a significant transaction to notify regulators before finalizing the agreement.
The filing initiates a waiting period, during which the FTC or the U.S. Department of Justice can request additional information from the companies. This request, known as a “second request,” may lead to a formal challenge.
Seagen’s notice indicates that both companies still anticipate completing the deal in late 2023 or early 2024.
However, the attention of investors has turned to the possibility of regulatory objections following the FTC’s lawsuit in May to block Amgen’s US$27.8 billion acquisition of Horizon Therapeutics.
This marked the FTC’s first challenge to a pharmaceutical merger in recent history, signaling a shift in its perspective on anti-competitive practices in the industry.
Stifel analyst Stephen Willey expressed pessimism about the prospects of the Pfizer-Seagen deal in light of the FTC’s lawsuit, stating, “We believe the read-through of this action is clearly negative.”
Conversely, some analysts questioned the FTC’s ability to succeed in challenging Amgen’s acquisition and suggested that Pfizer might not encounter a similar obstacle.
Raymond James analyst Dane Leone commented, “We would be surprised if this legal argument holds up when challenged by Amgen, and the read-through to other pending mergers such as [Pfizer]/[Seagen] may be limited.”
Andrew Berens, an analyst at SVB Securities, noted that the refiling could be a strategic move by Pfizer and Seagen to provide regulators with more information while avoiding a more burdensome second request.
Berens emphasized, “We do not think that this update alone suggests that the FTC may try to block the merger.”
In addition to the U.S. regulatory review, Pfizer and Seagen have also referred their deal to European regulators as of June 1.
The latest filing by Seagen acknowledges that if the European Commission gains jurisdiction over the merger review, its approval will become a necessary condition for closing the acquisition.
With a value of US$43 billion, this deal represents the largest in the industry since AbbVie’s US$63 billion acquisition of Allergan in 2019. It would significantly expand Pfizer’s portfolio of cancer medicines.
Both the Pfizer-Seagen deal and Amgen’s acquisition of Horizon were seen as positive developments for the biotechnology sector, which has faced a downturn for much of the past year and a half.
An evidentiary hearing for the FTC’s challenge to Amgen is scheduled for September 11 in the U.S. District Court for the Northern District of Illinois.
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