by Biopharma takeovers are often accompanied by layoffs and lab closures as smaller companies are absorbed. Whether that will happen at Seagen is a big question that will affect the Seattle-area biotech community.
Pfizer on Monday announced plans to buy Seagen, the Bothell, Wash.-based biotech giant, for $43 billion. It would be one of the largest acquisitions of a company in the Seattle area and the largest biopharma transaction in three years.
In an investor call Monday, Pfizer CEO Albert Bourla said the New York-based pharmaceutical giant plans to keep Seagen’s operations in the Seattle area and San Francisco. “We don’t buy the golden eggs,” said Burla, “we buy a goose, but she lays the golden eggs for us.”
Biotech experts in the Seattle area said Seagen’s platform and regional talent would be an asset to Pfizer, though some said they also expected layoffs as the companies combine.
“Finally, we see Washington’s life sciences industry making progress,” said Marc Cummings, CEO and president of the trade group Life Science Washington. “Investors and companies around the world are paying close attention and investing not only in assets but in the quality of science, rich expertise and top talent in the region.”
Seagen has been “incredibly productive,” said David Miller, a consultant for Seattle-area biopharmaceutical companies. “If I were Pfizer, I’d be tempted to keep all of that in place,” he said.
Founded in 2002 as Seattle Genetics, the company is a pioneer in the development of antibody-drug conjugates (ADCs), a class of drugs that target cells using an antibody and deliver a toxin to kill them. Seagen has four oncology drugs on the market and a pipeline of other candidates that includes 11 potential new drugs.
These assets complement Pfizer’s emphasis on small-molecule drug candidates, Bourla said, and open the door to new types of agents that combine its drug database with Seagen’s platform.
Pfizer markets two approved ADCs and last year licensed two ADC candidates to biotech company Pyxis. “We didn’t do as good a job as Seagen did” with ADCs, Bourla said on the call. But he said Pfizer had “enough expertise to appreciate how good the platform is and how good the people at Seagen are.”
The deal, which is expected to close in late 2023 or early 2024, is likely to face regulatory scrutiny, Miller noted. But the acquisition is not likely to give Pfizer new pricing power in the market, Miller said. “There’s no reason why the merger shouldn’t be done from a competitive standpoint,” he said.
Seagen has 3,200 employees in the US 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 the University of Washington’s CoMotion commercialization effort, said he expects Seagen’s workforce to shrink. In the short term, this could add to the recent wave of biotech layoffs in the region, which have affected TwinStrand Biosciences, NanoString Technologies and Sana Biotechnology, among others. Earlier this month, Danish biotech giant Novo Nordisk announced it was closing a lab in Seattle and laying off 86 workers.
Previous biopharma acquisitions have had mixed effects on employment and life sciences in the Seattle area.
Eli Lilly shuttered early Seattle biotech company Icos after acquiring it in 2007. In 2014, Amgen announced it was closing its Seattle operations and laying off more than 600 workers, 12 years after acquiring Seattle-based Immunex.
Concerns about 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 up shop, BMS grew in the region and now employs more than 1,400 people in Seattle and Bothell.
The BMS deal also unleashed a wave of innovation in the region as Juno veterans launched a number of new companies, strengthening Seattle’s role as a cell therapy hub.
“I’m cautiously optimistic about what this means for our region,” said William Canestaro, managing director of the Washington Research Foundation and WRF Capital. “When Amgen left, they grossly miscalculated how few people wanted to move. BMS learned from this. I hope that Pfizer will learn from what went well and look to grow here locally.”
Canestaro added that he still expects some layoffs. “It will be painful for the first couple of years, but hopefully much stronger in the long run. Every acquisition comes with some downsizing and re-leveling,” he said.
Seattle is ranked as the top biotech employment cluster, but outside of BMS there is no major biopharma anchor tenant in the region. Now, with companies hiring remotely and Seattle’s reputation growing as a major biotech hub, the value of having a major biopharma presence to absorb workers has faded, Williams said.
If layoffs are on the cards, Seagen workers will be prized as job candidates for smaller companies and for telecommuting, Williams said.
Seagen has several ongoing clinical trials, including studies testing its approved drugs in new types of tumors and in early stages of the disease. The biotech company is also testing ADCs in combination with immunotherapies, including Merck’s Keytruda. Pfizer has deep expertise in clinical trials and drug marketing to bring to such efforts.
In an interview with CNBC, Bourla said Pfizer had big plans for Segen’s ADC platform.
“We can add value to what Seagen brings,” Burla said in the interview. “It’s pretty much a situation like when mRNA was in our hands. With our scale, with our capabilities, that’s the same here,” Bourla said, referring to Pfizer’s rapid development of the mRNA-based COVID-19 vaccine.
Seagen had revenue of $2 billion in 2022, and Pfizer said it could contribute more than $10 billion in risk-adjusted revenue in 2030, with significant growth likely beyond 2030. The proposed combination with Seagen would double its clinical pipeline Pfizer’s early stage oncology.
Canestaro said it was “difficult to predict” whether the proposed acquisition would be scrutinized by regulators. But the deal is more likely to go through than if Merck, which was reportedly in talks with Seagen about a takeover last summer, is involved. Merck sells blockbuster immunotherapy drug Keytruda and has a deeper Oncology pipeline than Pfizer.
The biopharma business is “cyclical,” Banex said. “The silver lining is that some former employees will embrace entrepreneurship and start the next Seagen, keeping our life sciences ecosystem alive and well.”
