Seattle-area biotech experts are eying the past warily in the wake of this week’s news that Pfizer plans to acquire Bothell, Wash.-based Seagen for a whopping $43 billion.
Most previous acquisitions in the Seattle region have ultimately gutted biotech companies and their workforces, including at Immunex, Icos, Corixa and Zymogenetics. That history has some on edge about Seagen’s future.
“Historically, acquisition has not enabled our successful biotechs to persist locally,” said Alan Wahl, an early Seagen employee and CEO of Seattle-area biotech startup Abacus Bioscience.
Pfizer, the New York City-based pharma giant, said this week it intends to maintain Seagen’s locations in Bothell and San Francisco. Seagen has 3,300 employees, a majority of which are based at its headquarters in Bothell, near where it plans to build a new 270,000 square foot manufacturing facility.
“Perhaps Seagen’s greatest asset is its people,” said Pfizer CEO Albert Bourla in a conference call Monday.
But many expect downsizing at Seagen if the acquisition is approved.
“It will be painful for the first couple years but hopefully much stronger in the long run,” Will Canestaro, managing director of Washington Research Foundation, told GeekWire Monday.
Stewart Lyman, a recently retired biopharma consultant, was laid off in 2002 when Amgen acquired Immunex, which then had 1,590 employees in the Seattle region.
Amgen promised to retain Immunex’s R&D team. But more than a decade later in 2014 it shut down its Seattle operations.
Lyman is skeptical that Pfizer will retain a strong presence in Seattle outside of manufacturing.
“I’ve seen this movie before,” he said.
Pfizer is planning to achieve nearly $1 billion in “cost efficiencies” in the third full year after the transaction is closed, with most of that during the second year, said Bourla.
“These targeted efficiencies would be across several functional lines by eliminating duplication. That said, we do not anticipate any reductions in either company’s R&D programs due to the transaction,” said Bourla. He added that some of the goal would be met by leveraging Seagen workers for Pfizer as it prepares to launch and commercialize 19 new products.
But even if Pfizer does end up cutting Seagen’s workforce, there could be silver linings for Seattle’s biotech ecosystem — if history is any indication.
Seagen itself is the product of a biopharma closure in Seattle.
Clay Siegall and H. Perry Fell founded the company after their previous employer, Bristol Myers Squibb, closed a research center in the city in the late 1990s. The pair cut a deal to acquire technology from BMS that seeded the startup originally known as Seattle Genetics.
Seagen is now a R&D powerhouse with four approved drugs and 11 product candidates for breast, bladder, lung and other cancers. Seagen reported $2 billion in revenue and a net loss of $610 million for 2022, along with $1.3 billion poured into R&D expenses.
Seagen is not the only Seattle-area company that emerged from a biopharma shut-down or buyout. Lyell Immunopharma, Sana Biotechnology, Shape Therapeutics and a raft of other new companies were founded by veterans of Juno Therapeutics after its $9 billion acquisition by Celgene, cementing Seattle as a center for gene and cell therapy.
“We all hope that Pfizer will stay and expand on the gem they’ve acquired,” said Wahl. “But if not, perhaps there is still good in the outcome, as the scientists and pioneering creativity will stay and the resultant diaspora will seed more local visionary upstarts.”
The acquisition of Seagen would be the largest biopharma buyout in three years, and the biggest ever for a Seattle-area biotech company. It is expected to close in late 2023 or early 2024.