Seagen Earnings: Strong Sales Growth and Pipeline Makes Progress; Acquisition by Pfizer on Track

Seagen SGEN delivered strong product revenue of $571 million during the third quarter, growing 33% year over year thanks to continued strong performance from Padcev, Adcetris, and Tukysa. Total revenue for the quarter, including royalties and license agreement revenue, was $649 million, representing growth of 27% over the prior-year period. Seagen’s previously announced acquisition agreement by Pfizer remains on track to close in late 2023 or early 2024. We maintain our fair value estimate of $229 per share, which is the takeover price for the deal.

Padcev’s sales grew 89% over the same quarter last year following the successful launch in the U.S. in combination with Merck’s Keytruda as a front-line treatment for patients with advanced urothelial cancer who are not eligible to receive cisplatin-containing chemotherapy. Padcev in combination with Keytruda demonstrated a 53% reduction in the risk of death and a near doubling in the median overall survival versus chemotherapy in patients with previously untreated locally advanced or metastatic urothelial cancer.

Seagen’s narrow moat rating is based on intangible assets from its development of antibody-drug conjugates for various cancer indications. We believe Seagen will likely be able to earn excess returns over the next 10 years thanks to its highly effective technology in lucrative indications protected by patents that last until 2036. We continue to have a positive long-term outlook for Seagen thanks to the progression of Seagen’s pipeline. Late-stage trials for additional indications of Padcev and Tukysa have shown positive results and garnered additional approvals. We expect this will further expand Seagen’s patient reach, and we think Pfizer’s deep pockets will help accelerate the development of Seagen’s pipeline candidates over the next several years.