Merck to Acquire ADC Leader Seagen

Merck is evaluating the possibility of acquiring Seagen, according to the Wall Street Journal. As soon as the news came out, Seagen rose nearly 18% after triggering a circuit breaker.

According to the report, Merck and Seagen have been discussing this possibility, and the relevant negotiations between the two sides have been going on for some time, and the transaction is not imminent. Merck and Seagen may finally sign a new marketing deal. In addition, other unnamed companies are also eyeing Seagen as a takeover target.

According to the data, Seagen (formerly known as Seattle Genetics) was established in 1998 and is a pioneer in the global research and development of ADC drug technology. In 2001, Seagen successfully synthesized the patented small-molecule cytotoxic drug MMAE targeting tubulin. Based on the MMAE molecule, it developed a variety of dipeptide linkers, and screened out the di-peptide linkers with valine-citrulline as the main structure. The peptide linker realizes the coupling reaction by reducing the sulfhydryl group generated by linking the disulfide bond, thus constructing the patented ADC technology platform.

In 2011, Adcetris was approved for listing, marking Seagen's ADC technology recognition. Since then, its stock price has risen 20 times in 20 years.

Adcetris is an ADC drug targeting CD30, which is highly expressed in various lymphomas, while in healthy conditions, only a small number of lymphocytes in the human body express CD30 on the surface. Adcetris uses MMAE as a toxic small molecule, which is coupled to the cysteine residue of the monoclonal antibody cAC10 through the mc-vc-PABC cleavable linker, with a DAR value of about 4.

Seagen is worthy of being a star enterprise in the field of ADC. Currently, 4 new ADC drugs (3 independently developed and 1 cooperatively developed) have been approved for marketing, and there are many new ADC drugs under development. According to medical cube data, its ADC pipeline ranks second in the world, second only to ImmunoGen.

In 2021, Seagen will achieve revenue of $1.57 billion, including $1.4 billion in product sales and $710 million in Adcetris sales (North America, outside North America sold by Takeda). Seagen posted a net loss of $670 million in 2021.

On August 8, 2021, Seagen introduced the new HER2 ADC drug Vidicitumab from Rongchang Bio. According to the agreement, the two parties will jointly develop and commercialize the HER-2-targeting ADC drug vedicitumab (RC48, disitamab vedotin).

The deal is valued at up to $2.6 billion, and Seagen will pay Rongchang Biotechnology an upfront payment of $200 million, potential milestone payments of $2.4 billion, and a sales-sharing fee. Seagen will acquire the global development and commercialization rights for RC48, and Rongchang Bio will retain the rights to Asia outside of Japan and Singapore.

Merck and Seagen have previously cooperated. In September 2020, in 2020, Merck and Seagen reached a cooperation, the two parties will jointly develop the LIV-1 ADC drug ladiratuzumab vedotin, and conduct clinical research on the combination of the drug and Keytruda. Merck made a $600 million down payment to Seagen and milestone payments of up to $2.6 billion, and made a $1 billion equity investment in Seagen.