The regulatory clock for the Federal Trade Commission to review Pfizer’s proposed acquisition of cancer drug developer Seagen will now run through mid-July, setting up four more weeks of suspense for investors waiting to see whether the agency takes issue with the $43 billion deal.
The new timeline is the result of Pfizer withdrawing its merger notification paperwork, which it plans to refile Wednesday, according to a regulatory notice from Seagen.
Under a law known as Hart-Scott-Rodino, companies entering a deal of a certain size must notify regulators ahead of completing their agreement. The filing starts a waiting period, during which either the FTC or the U.S. Department of Justice can choose to request additional information from the companies. This so-called second request can then lead to a formal challenge.
The companies still expect to complete their deal in late 2023 or early 2024, according to Seagen’s notice.
However, investors are newly focused on the possibility of a regulatory objection to Pfizer’s planned takeover after the FTC in May sued to block Amgen’s $27.8 billion acquisition of Horizon Therapeutics. The challenge was the first by the FTC of a pharmaceutical merger in recent history, and followed the regulator rethinking its stance on what constitutes anticompetitive practices in the industry.
“We believe the read-through of this action is clearly negative” for the prospects of the proposed Pfizer-Seagen deal, wrote Stifel analyst Stephen Willey in a note to clients after the FTC filed its lawsuit.
Other analysts doubted whether the FTC’s challenge to Amgen would succeed and suggested Pfizer may not face a similar roadblock. “We would be surprised if this legal argument holds up when challenged by Amgen, and the read-through to other pending mergers such as [Pfizer]/[Seagen] may be limited,” wrote Raymond James analyst Dane Leone in a May 16 client note.
Andrew Berens, an analyst at SVB Securities, noted Wednesday’s refiling could be a strategy to provide regulators with more information but sidestep a more onerous second request. “We do not think that this update alone suggests that the FTC may try to block the merger,” Berens wrote in a Wednesday afternoon note to clients.
In addition to regulatory review in the U.S., Pfizer and Seagen on June 1 referred their deal to regulators in Europe. Wednesday’s filing by Seagen notes that, if the European Commission obtains jurisdiction to review the merger, its approval will become a condition for closing the acquisition.
The $43 billion deal is the industry’s largest since AbbVie’s $63 billion takeover of Allergan in 2019, and would greatly expand Pfizer’s portfolio of cancer medicines. It and Amgen’s deal for Horizon were viewed as positive catalysts for a biotechnology sector that’s been mired in a downturn for much of the past year and a half.
An evidentiary hearing in the FTC’s challenge to Amgen is scheduled for September 11 in U.S. District Court for the Northern District of Illinois.
Editor’s note: This story has been updated with analyst commentary from SVB Securities.