Pfizer Inc. (NYSE: PFE) has secured all necessary regulatory approvals to finalize its $43 billion acquisition of antibody-drug conjugate (ADC) specialist Seagen Inc. (NASDAQ: SGEN), with the deal set to close today. The US pharmaceutical giant had to make concessions to address the US Federal Trade Commission’s (FTC) concerns over potential market harm, agreeing to donate all future royalty rights from US sales of the PD-L1 drug Bavencio (avelumab) to the American Association for Cancer Research (AACR).
In conjunction with the acquisition news, Pfizer issued its financial guidance for 2024, which disappointed investors with lackluster revenue and earnings per share (EPS) projections. The company anticipates revenues in the range of $58.5 billion to $61.5 billion, including a $3.1 billion contribution from Seagen, and EPS guidance of $2.05 to $2.25. Pfizer’s share price plummeted over 6% by the end of trading, reaching a multi-year low.
Pfizer anticipates its COVID portfolio, including the Comirnaty vaccine and Paxlovid pill, to contribute $8 billion in 2024, a significant drop from the projected $12 billion by the end of this year. Excluding COVID-19 sales, the underlying portfolio is expected to grow by a healthy 8%-10% next year. However, Pfizer’s 2024 forecast is nearly flat compared to this year, with the latest Q3 financial report forecasting full-year sales in the range of $58 billion to $61 billion.
Seagen, a leader in the ADC space with three of the 12 ADCs currently approved in the US, is expected to generate at least $10 billion in annual revenues for Pfizer by 2030. The $43 billion purchase price, combined with several other recent acquisitions, will result in Pfizer carrying approximately $65 billion in debt. The steeper-than-expected decline in COVID-19-related revenues this year exacerbates Pfizer’s debt repayment challenges. Pfizer reported a 41% drop in revenues to $13.2 billion in Q3 and recorded its first net loss since 2019, a $2.38 billion loss following a $5.7 billion write-off of COVID-19 product inventory canceled by the US government. To improve profitability, Pfizer has initiated a ‘cost realignment program’ aiming for at least $3.5 billion in net cost savings by the end of 2024, which includes job cuts at several US and UK sites. Nevertheless, it is unlikely that the company’s financial performance will recover until the impact of COVID comparisons subsides.- Flcube.com
