Merck in advanced talks to buy biotech company Seagen

Yahoo Finance Live anchors discuss reports of an acquisition deal between Merck and Seagen.

Video transcript

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- Welcome back. We're a few minutes away from the opening bell on Wall Street, but let's hit a couple movers on the Yahoo! Finance platform. But I'm watching SEAGEN on a Wall Street Journal report that Merck may bid $40 billion for the company. Now, we reached out to Merck for comment. They did not return our request for comment. But, Brad, this could be a pretty big deal for Merck, as KEYTRUDA, its key cancer drug, could lose patent protection over the next decade.

- Yeah. The mitochondria is the powerhouse of the cell, I've been taught. And oncology is the powerhouse for Merck results and sales here. And this is extremely key for Merck being able to, as time goes on and patents roll off for them, being able to make some strategic acquisitions that really help them shore up the sales and revenue that they see in that oncology business here. That continues to account for a little bit shy of a third of the business as of this most recent quarter.

And so really looking across kind of this acquisition landscape, we could see even more consolidation in that effort, as you do see across Merck and other biotechnology companies looking to ensure that that next leg of growth kind of similar to what we see in the ERP landscape, where there's this acquirer-to-grow strategy for licensing and for the technology, similarly so in the biotechnology space as well. And so this particularly would be massive for SEAGEN if they were to be absorbed by Merck here. And we'll see if we can get a statement from either of the companies confirming this one way or the other, Soz.

- Yeah. SEAGEN a major player, Brad. Last year, one of its key products, ISENTRESS, $1.4 billion in sales and really overall the company is looking to have over $1 billion in sales this year, according to Wall Street analysts. I believe close to actually $2 billion, so a real legitimate company doing very important work. But, Brad, you get the sense the big are going to get bigger inside the drug space as they all position for the future of various diseases. It's not just Merck. It's also Pfizer.

- And for both of those companies, a key effort that they've been attempting to move forward with over the past two years is ensuring that their vaccine candidates are able to not only be another line item but be receptive by the general population. And the larger question is when some of those vaccine revenues that they've seen, whether a result of some of the state or government funding or the result of additional purchases being made from other countries around the world, when that starts to roll back a little bit.

Where do you start to backfill for that revenue that some of the investors have either already had to price in or become accustomed to at least this revenue level over this period of time? So continuing to keep a close eye on some of the vaccine manufacturers and producers and those involved within that supply chain as well.