Pfizer Inc. (PFE): Is Seattle Genetics (SGEN) an Acquisition Target?

Not to be left out, Pfizer Inc. (NYSE:PFE) is also conducting research using Seattle Genetics’ ADCs, inking a deal in 2011 that could be worth as much as $200 million in milestone payments. Pfizer Inc. (NYSE:PFE) also agreed to a collaboration deal with Seattle Genetics’ ADC competitor CytomX Therapeutics worth more than $600 million this past June.

Bayer, another long-term Seattle Genetics partner, signed a deal for access to Seattle Genetics’ auristatin-based ADC technology this past June. Bayer agreed to pay Seattle Genetics $20 million up front, with up to $500 million in milestone payments, as well as future royalties.

“Antibody-drug conjugates are one of our focus areas in oncology research and we are looking forward to strengthening our portfolio in this area of personalized medicine through the collaboration with Seattle Genetics,” Bayer’s Head of Global Drug Discovery Andreas Busch said in June.

Of course, this only matters if drugs make it to market
So far, Adcetris’ success — the drug generated nearly $70 million in sales in the first six months — and confidence exhibited by major pharmaceuticals has produced mixed financial results. The company lost $6.9 million, or $0.06 per share, in the second quarter. That loss was far better than the $17 million it lost a year ago, and results did outpace Wall Street analysts who were looking for a $0.18 per share loss. Still, losses are losses.

Overall, high-profile and deep-pocketed collaborators offer a who’s who of potential acquirers, all of whom might someday want to lock up the technology and competitors royalties. The big “if” surrounding any future deal remains success, however. For Seattle Genetics to be truly worth acquiring, additional drugs powered by the company’s ADCs will need to make their way through clinical trials to pharmacy storerooms.

The article Is Seattle Genetics an Acquisition Target? originally appeared on Fool.com and is written by Todd Campbell.

Todd Campbell has no position in any stocks mentioned. The Motley Fool recommends Seattle Genetics.

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