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Seagen (SGEN) Stock Up on Rumors of Acquisition by Merck

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Shares of Seagen Inc. (SGEN - Free Report) were up 12.7% on Friday after rumors of a potential acquisition by pharma giant Merck & Co., Inc. (MRK - Free Report) did the rounds in the market.

Per a Wall Street Journal article, talks between the two companies have been underway for some time. However, a deal is not looking imminent at the moment due to the heightened risk of a regulatory challenge.

Reports also claim that a strategic or a marketing agreement between Seagen and Merck looks more likely than a complete buyout of the former.

Both Seagen and Merck are yet to confirm the validity of the news through a formal statement. There is no guarantee that Merck would make a potential buyout offer.

Shares of Seagen have rallied 7% so far this year against the industry’s decline of 28.1%.

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If a deal is at all likely to happen, it would definitely boost Merck’s portfolio of cancer drugs, which is led by its blockbuster PD-L1 inhibitor, Keytruda, which has been approved for treating several types of cancer indications.

Seagen boasts a strong portfolio of cancer drugs as well. A potential deal is likely to ensure a diversified and broader customer base for the company as it would include Merck’s market expertise and superior global presence.

The company currently markets four cancer drugs — Adcetris, Padcev, Tukysa and the newly approved Tivdak.

In the first quarter of 2022, Seagen recorded total revenues of $426.5 million, which increased 28.4% year over year.

All these drugs have witnessed strong uptake so far, with Adcetris being the majority contributor to Seagen’s top line. The drug has been approved by the FDA for six cancer indications.

Several label expansion studies on Adcetris, Padcev, Tukysa and Tivdak are currently underway, wherein a potential approval is likely to drive sales further in 2022 and beyond.

Seagen is collaborating with Merck, wherein the latter is co-funding the Tukysa global development plan. Padcev, in combination with Merck’s Keytruda, is being investigated in phase III studies for treating muscle-invasive bladder cancer.

Also, Seagen and Merck are jointly developing ladiratuzumabvedotin, which is also currently being evaluated in early-to-mid-stage studies both as monotherapy and in combination with other agents for treating metastatic breast cancer and other LIV-1-expressing solid tumors.

Zacks Rank & Stocks to Consider

Seagen currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the biotech sector are Leap Therapeutics, Inc. (LPTX - Free Report) and Precision BioSciences, Inc. (DTIL - Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Leap Therapeutics’ loss per share has narrowed 11.1% for 2022 and 5.9% for 2023 in the past 60 days.

Earnings of Leap Therapeutics have surpassed estimates in three of the trailing four quarters and missed the same on the other occasion. LPTX delivered an earnings surprise of 1.92%, on average.

Precision BioSciences’ loss per share estimates narrowed 21.7% for 2022 and 31.4% for 2023 in the past 60 days.

Earnings of Precision BioSciences have surpassed estimates in each of the trailing four quarters. DTIL delivered an earnings surprise of 76.15%, on average.