Seagen Amgen Stock Sinks Due To Increased Antitrust Scrutiny

(CTN News) – Seagen Amgen (NASDAQ:SGEN) shares fell over 6% on Tuesday morning, as the company’s stock price declined.

There was weakness overnight following a Bloomberg report that indicated the Federal Trade Commission was preparing to challenge Amgen’s (NASDAQ:AMGN) deal with Horizon Therapeutics (NASDAQ:HZNP), raising concerns that drug industry deals, especially large takeovers, may be scrutinized more closely in the future.

Earlier this year, Seagen entered into an agreement with Pfizer to be acquired in a merger valued at $43 billion through a merger involving both companies.

Comparatively, a deal announced by Amgen in December of $28 billion was reached for Horizon.

Analysts at Wells Fargo have stated that the development could put existing deals, as well as future major deals, at risk. According to a statement by PFE-SGEN, if this scrutiny is indeed aimed at stopping bigger deals, it may create a sense of jitteriness among investors regarding the deal.”

There are certain nuances which make comparing Amgen/Horizon to Pfizer (NYSE:PFE)/Seagen somewhat challenging.

Analysts at Berenberg believe that if the FTC decides to take action against Pfizer/Seagen, the implications will be limited.

“Despite the fact that there are little overlap between Horizon and Amgen in terms of marketed drugs, the FTC appears to be expressing concerns about the potential overlap in indications of pipeline assets, suggesting that the FTC has indeed increased its scrutiny of large mergers within the pharmaceutical industry,” they said.

This lawsuit could be seen as a sign of a new era for antitrust in biopharma M&A in the future if it is to go ahead.

In keeping with the FTC’s ‘bigger is bad’ mentality, we expect even more scrutiny on the PFE/SGEN deal, but we believe that there will be a rather limited read-across.”

The Pfizer and Seagen deal focuses on oncology, and the dynamics of oncology vary greatly from the immunology indications that Amgen and Horizon Therapeutics are targeting.

There is no doubt that immunology diseases are chronic, and that drugs with different mechanisms of action are usually competing for the same pool of patients.

On the other hand, we believe that even the same type of tumor in oncology may be amenable to multiple treatments, since patients will cycle through a number of therapies (e.g., lines of therapy) with a range of targets and mechanisms of action as well as AE profiles,” the analysts said.

In terms of the PFE/SGEN deal, we believe that the products that are marketed are virtually identical after Pfizer divested Bavencio (for bladder cancer) to SGEN.

On the basis of the latest pipelines of Pfizer and Seagen, we believe there is a limited overlap in the clinical stage assets of the two companies.”

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