The drugmaker said Monday that under the terms, Pfizer would pay $229 per share in cash. The companies expect the deal, which includes debt, to close at the end of this year or early next year.
However, it is likely to face scrutiny from antitrust regulators, who have stepped up their review of health care and other deals.
The settlement is an early sign that big drug companies are prepared to strike huge deals this year, despite the threat of close antitrust examinations and higher interest rates.
Drug makers had in recent years backed the pace of a tough deal, after finding the cost of potential targets too high. Still, they now need to inject new drugs — and sell them — into aging lineups, and price tags have plummeted after some research failures and rising interest rates.
Also on Monday, French drugmaker Sanofi SA said it will buy Provence Bio Inc. Inc., which sells Tizield for diabetes treatment, in a deal valued at $2.9 billion.
Siegen, which is based outside Seattle, helped pioneer a class of drugs known as antibody drug conjugates, or ADCs, that can strike tumors with a toxic agent.
The drugs could become one of the next big segments in the $375 billion worldwide cancer-drugs market, accounting for $31 billion in sales in 2028, according to estimates by drug-market-research firm Evaluate.
New York-based Pfizer is looking for acquisitions to help offset a projected $17 billion sales loss by 2030 as some top-selling drugs such as the blood thinner Eliquis and the breast-cancer drug Ibrance go off patent over the next several years. lose security.
Sales of Pfizer’s COVID-19 vaccine and drug have buoyed the company’s performance in recent years. Executives have said they cannot count on the same level of sales going forward as the pandemic enters an endemic phase, forcing the company to use its billions of dollars in Covid-19 revenue to seal the deal. being inspired.
Cancer treatment is a key franchise for Pfizer, contributing more than $12 billion to the company’s $100 billion in sales last year.
Pfizer is trying to increase its cancer-drug footprint. Analysts said Siegen’s therapy would expand Pfizer’s portfolio of breast and bladder cancer drugs, while complementing its efforts to position itself in other tumors with large patient populations, such as myeloma.
“We are investing to fight cancer,” Chief Executive Albert Bourla said in an interview. “We’re investing to grow.”
Pfizer executives said they expect the federal antitrust authority to sign off on the agreement because the company and CGen bring complementary capabilities.
Shares of Pfizer climbed 2.7% on the New York Stock Exchange on Monday morning, while CZ stock jumped more than 16%.
The CZen acquisition will help Pfizer generate an additional $25 billion in additional revenue by 2030, such as through business development, Pfizer executives said.
Pfizer executives said that CGen, which expects $2.2 billion in revenue this year, could bring Pfizer more than $10 billion in revenue by 2030 if the biotech broadens the use of its drugs to more types of tumors. succeeds in making.
Pfizer’s revenue target exceeded many analysts’ estimates, but Mr. Bourla called the target reasonable. He said Pfizer could help CGen expand its commercial capabilities and use its global drug-development network to help CGen accelerate its pipeline.
He also said that Pfizer expects to save $1 billion from the deal over the next three years, largely from avoiding costs such as broadening its sales force. Instead, Pfizer may use CGen.
“The proposed combination with Pfizer is the right next step for Siegen to advance its strategy,” said David Epstein, CEO of Siegen.
Because of the potential of ADCs, CGen attracted the attention of Pfizer and other drug makers. Merck and Co had discussed buying Czen last year, but the companies could not agree on a price, The Wall Street Journal has reported. Pfizer’s talks with CZ moved forward quickly after the Journal reported last month that the companies had begun talks.
Pfizer was eager to add cancer drugs to its portfolio, Mr. Bourla said. CGen was particularly attractive because it already has four approved products — which don’t pose a risk of failing during testing — as well as a promising pipeline. “It’s the perfect fit, the perfect target. We looked at everything,” Mr. Bourla said.
ADCs have begun to gain approval for some common cancers, such as breast cancer, and drug manufacturers have explored deploying them in combination with other cancer agents, including immunotherapies, which are some of the world’s best-selling drugs. .
Siegen has more than nine studies under trial for ADCs with immunotherapy.
To ensure that CGen scientists keep innovating, Mr. Bourla said Pfizer hopes to maintain CGen’s laboratories in Seattle and San Francisco.
“We’re not buying the golden egg. We’re acquiring the hen that laid the golden egg,” Mr. Bourla said on a conference call with analysts and investors.
CGen sells four products, three of which include ADCs. These include Padsave, which was approved in 2019 to treat patients with bladder cancer who had failed to improve after taking other drugs.
The US Food and Drug Administration is reviewing a regimen combining PadSave with Merck’s Keytruda immunotherapy for the treatment of advanced bladder cancer in patients ineligible for chemotherapy. According to analysts surveyed by FactSet, PadSave could generate total sales of $2.8 billion in 2028.
CGen, formerly known as Seattle Genetics, emerged as a deal target last year after the CEO and president resigned as the company was under investigation for a domestic violence allegation. The company said the executive denied the allegations and told the company he was going through a divorce.
Mr Epstein had taken over Cigen in November after talks with Merck ended, and has been plotting an independent course for the company.
Jared S. at jared.hopkins@wsj.com Hopkins and Jonathan D. Rockoff at jonathan.rockoff@wsj.com