Pfizer (PFE) has announced that it will acquire Seagen for the sum of $43 billion (USD). The deal is expected to close in late 2023 or early 2024, pending regulatory approvals and other customary closing conditions, but that’s a long time away in the trading term. What can we expect to see on the charts in the coming months?
Who is Seagen?
Seagen is known for its antibody-drug conjugate (ADC) technology, which delivers potent drugs directly to cancer cells while sparing healthy tissues. Seagen has three approved products on the market: Adcetris, Padcev, and Tukysa. It also has a robust pipeline of more than 10 clinical-stage candidates across various types of cancers.
Pfizer said that the acquisition of Seagen would enhance its oncology portfolio and capabilities, as well as accelerate its revenue growth and earnings potential. But could such a purchase increase share value in 2023, since Pfizer itself only expects the deal to be accretive to its adjusted earnings per share by 2025?
Pfizer's CEO Albert Bourla said in a statement: "We are thrilled to welcome Seagen to the Pfizer family and believe that together we will transform the lives of millions of cancer patients around the world. Seagen's expertise in ADC complements our leadership in immuno-oncology and targeted therapies, creating an unrivaled opportunity to advance the science and deliver more breakthroughs for patients."
Until now, Pfizer has only focused on Covid vaccination, antibiotics, and supplements. Moving into the cancer treatment sector opens many doors for the company with a potential long-term supply/demand dynamic.
Seagen's CEO Clay Siegall said in a statement: "We are proud of what we have accomplished at Seagen over the past two decades and are excited to join forces with Pfizer to bring our innovative medicines to more patients globally. We share a common vision of discovering and developing transformative therapies for people with cancer."
How will Pfizer stock react to this news? Some analysts have expressed positive views on the deal. For example, Mizuho Securities analyst Vamil Divan said: "We view this as an attractive acquisition for Pfizer given Seagen's strong position in hematology/oncology. We also see significant synergies from combining Pfizer's global reach with Seagen's innovative pipeline."
Before Pfizer announced the Seagen acquisition on 13 March 2023, Pfizer's stock tanked due to an unexplainable selloff. After the acquisition news confirmed the offer of $229 (USD) per Seagen share, the market sentiment became strongly bullish, rising 7% to $40.65 within the first 5 hours. Now in a steady range rise, the latest retrace barely made it to the 0.236 of the Fibonacci, making it a strong bullish signal.
However, some investors may have concerns about the high price tag of the deal, which values Seagen at a premium of about 40% over its closing price on Friday. Some may also question whether Pfizer can integrate Seagen smoothly and efficiently without disrupting its operations. And of course, the looming recession is still a factor to consider.
Ultimately, the long-term impact of the deal will depend on how well Pfizer can leverage Seagen's assets and expertise to create value for its shareholders and customers. Covid was a convenient cash cow for the pharmaceutical giant, and now it is turning its sights on Cancer, and if it makes significant advances in treatments and success rates, the sky's the limit.
And while the joining of these two companies will be beneficial to millions over the coming years, Q2 traders might consider adding stochastic and RSI to their chart analysis when forecasting with technicals. A steady growth seems obvious, but increased trading volume from institutional investors may be sporadic, causing wild and unforeseeable volatility. Exness’ Stop Out Protection feature will significantly reduce risks, but Stop Loss is highly recommended for traders planning to leave orders open for multiple days or weeks.