Biopharma acquisitions often come with layoffs and lab shutdowns as smaller companies get absorbed. Whether that happens to Seagen is a big question that will impact the Seattle-area biotech community.
Pfizer on Monday announced plans to acquire Seagen, the Bothell, Wash.-based biotech giant, for a whopping $43 billion. It would be one of the largest acquisitions ever of a Seattle-area company, and the biggest biopharma transaction in three years.
In an investor call Monday, Pfizer CEO Albert Bourla said that the New York City-based pharma giant intends to keep Seagen’s operations in the Seattle area and San Francisco. “We are not buying the golden eggs,” said Bourla, “We are acquiring a goose that is laying the golden eggs.”
Seattle-area biotech experts said that Seagen’s platform and its regional talent would be an asset for Pfizer, though some said they also expected layoffs as the companies combine.
“Ultimately, we’re seeing Washington’s life science industry hit its stride,” said Marc Cummings, CEO and president of trade group Life Science Washington. “Investors and companies around the world are paying close attention, and investing not just in assets but in the quality of the science, rich expertise and top talent in the region.”
Seagen has been “incredibly productive,” said David Miller, a consultant for Seattle area biopharma companies. “If I was Pfizer, I’d be tempted to keep all of that in place,” he said.
Launched in 1998 as Seattle Genetics, the company is a pioneer in the development of antibody-drug conjugates (ADCs), a class of drugs that zeros in on cells using an antibody and delivers a toxin or other small molecule to them. Seagen has four oncology drugs on the market and a pipeline of other candidates that includes 11 potentially novel drugs.
Those assets complement Pfizer’s emphasis on small-molecule drug candidates, Bourla said, and open the door to new types of agents combining its drug database with Seagen’s platform.
Pfizer markets two approved ADCs and last year out-licensed two ADC candidates to biotech company Pyxis. “We didn’t do as good a job as Seagen” with ADCs said Bourla in the call. However, he said Pfizer had “enough expertise to appreciate how good the platform and how good the people of Seagen are.”
Bourla also said Pfizer plans to achieve nearly $1 billion in “cost efficiencies” in the third full year after the transaction is closed, though he did not anticipate reductions in Seagen’s R&D program. He also said Pfizer would leverage Seagen workers as it prepares to launch and commercialize 19 new products.
The deal, which is expected to close in late 2023 or early 2024, is likely to face regulatory scrutiny, noted Miller. But the acquisition is not likely to provide Pfizer new pricing power in the market, said Miller. “There is no reason why the merger shouldn’t go through from a competitive standpoint,” he said.
Seagen has 3,300 employees in the U.S. and Europe, and 1,800 in the Seattle area. It announced plans last year to build a 270,000 square foot manufacturing facility north of Seattle.
François Baneyx, director of University of Washington’s commercialization effort CoMotion, said he expects that Seagen’s workforce will contract. In the shorter term, that could add to the recent biotech layoffs in the region, which have affected TwinStrand Biosciences, NanoString Technologies and Sana Biotechnology, among other companies. Earlier this month, Danish biotech giant Novo Nordisk announced it was closing a Seattle lab and laying off 86 workers.
Previous biopharma acquisitions have had mixed effects on employment and life sciences in the Seattle area.
Eli Lilly shut down the operations of early Seattle biotech company Icos after acquiring it in 2007. In 2014 Amgen announced it was shutting its Seattle operations and laying off more than 600 workers, 12 years after acquiring Seattle company Immunex.
Concerns of similar layoffs rippled through the Seattle biotech community in 2019 when Bristol Myers Squibb acquired Celgene, the parent company of Seattle cell therapy pioneer Juno Therapeutics. But instead of closing shop, BMS grew in the region and now employs more than 1,400 workers in Seattle and Bothell.
The BMS deal also unleashed a wave of innovation in the region as Juno veterans launched a raft of new companies, cementing Seattle’s role as a center for cell therapy.
“I am cautiously optimistic about what this means for our region,” said William Canestaro, managing director of Washington Research Foundation and WRF Capital. “When Amgen left, they severely miscalculated how few people wanted to move. BMS learned from that. It’s my hope that Pfizer will learn from what’s gone well and lean into growing here locally.”
Canestaro added that he still expects layoffs. “It will be painful for the first couple years but hopefully much stronger in the long run. Every acquisition comes with some downsizing and re-leveling,” he said.
Seattle has been ranked as a top-ten biotech employment cluster, but outside of BMS there is no major pharma anchor tenant in the region. Now, with companies hiring remotely and Seattle’s reputation growing as a biotech hub, the need for a large pharma presence to absorb employees has waned, said Williams.
If layoffs are in the cards, Seagen employees will be prized as job candidates for smaller companies and as remote workers, said Williams. “Unlike how it would have been six to eight years ago, I don’t think it’s a real blow for the Seattle biotech community,” he said of the deal.
Seagen has more than 35 ongoing clinical trials including studies testing its approved drugs in additional tumor types and at earlier disease stages. The biotech company also is testing ADCs and other agents in combination with immunotherapies, including Merck’s blockbuster Keytruda. Pfizer has deep expertise in clinical trials and drug marketing that it can bring to such efforts.
In an interview with CNBC, Bourla said Pfizer had big plans for Seagen’s ADC platform.
“We can add value to what Seagen is bringing,” Bourla said in the interview. “It’s more or less a situation like when mRNA was in our hands. With our scale, with our capabilities, this is the same here,” said Bourla, referring to Pfizer’s rapid development of its COVID-19 vaccine.
Seagen pulled in $2 billion in revenue in 2022, and Pfizer said the deal could contribute more than $10 billion in risk-adjusted revenues in 2030, with potential significant growth beyond 2030. The proposed combination with Seagen would double Pfizer’s early-stage oncology clinical pipeline.
Canestaro said that it is “hard to predict” if the proposed acquisition will be scrutinized by regulators. But the deal has greater odds of making it through than if it had involved Merck, which was reportedly in discussions with Seagen over an acquisition last summer. Merck not only sells Keytruda, it also has a deeper oncology pipeline than Pfizer.
The biopharma business is “cyclical,” said Baneyx. He added, “The silver lining is that some former employees will embrace entrepreneurship and start up the next Seagen, keeping our life sciences ecosystem vibrant and healthy.”
Editor’s note: This story was updated with information about the future of Seagen’s R&D program.
