Good day, everyone, and welcome to Pfizer's Analyst and Investor call to discuss proposed acquisition of Seagen. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Chris Stevo, Senior Vice President and Chief Investor Relations Officer. Please go ahead, sir.
Thank you for joining our call today on short notice. Today's call will last approximately 60 minutes. We will start with some prepared remarks, followed by a question-and-answer session. Before we begin, let me remind you that Pfizer and Seagen will be making forward-looking statements during the course of this call that are subject to substantial risks and uncertainties. We undertake no obligation to update those statements. Any comments we make are valid only as of today. For additional information, please see the press release regarding the proposed transaction that we issued today and the S.E.C. Forms 10-Q and 10-K filings of the companies in the sections entitled Risk Factors and Forward-Looking Information and Factors that May Affect Future Results in the case of Pfizer or Special Note Regarding Forward-Looking Statements in the case of Seagen.
Our discussion today will also include certain financial measures that are not calculated in accordance with U.S. generally accepted accounting principles or GAAP. We believe these non-GAAP financial measures provide additional information pertinent to our business performance. These non-GAAP financial measures should not be considered replacements for GAAP financial measures. We're joined today by our speakers, our Chairman and CEO, Albert Bourla, who will discuss the transaction rationale. Seagen's CEO, David Epstein, who will talk about the transaction from Seagen's perspective, followed by Chris Boshoff, our Chief Development Officer, Oncology and Rare Disease, who will highlight the complementary fit of the respective portfolios, pipelines, and scientific platforms. Followed by Dave Denton, our CFO, who will run through the key financials.
Suneet Varma , our Worldwide and US President, Oncology, Aamir Malik, our Chief Business Innovation Officer, Mikael Dolsten, President, Worldwide Research, Development, and Medical, Roger Dansey, Seagen's President of R&D, and William Pao, Head of Global Product Development, will also join us for the Q&A session. Now let me turn it over to Albert.
Thank you, Chris. Good morning, everyone, thank you for joining us. Today is an exciting day for Pfizer, for Seagen, for patients with cancer around the world. That's because today, Pfizer and Seagen have announced that we have entered into a definite merger agreement under which Pfizer will acquire Seagen, a pioneer in antibody-drug conjugate technology, which is called ADCs, which is rapidly emerging as a powerful tool in cancer treatment. Oncology is a core therapeutic area for Pfizer, we believe the proposed combination with Seagen will enhance our position in this important space while significantly advancing the global fight against cancer, which continues to be the largest growth driver in global medicine and has a significant impact on public health.
Over the past few years, Pfizer delivered to the world breakthrough solutions that have helped bring an end to the COVID-19 crisis, and now we are ready to hopefully do the same with cancer. With COVID-19, we chose the right novel technology, mRNA, and the right partner, BioNTech, and then applied the scale and power of Pfizer's capabilities to deliver solutions to patients worldwide. We believe we can do this again with cancer by using another novel technology, ADCs this time, and bringing the world's best ADC company, which is Seagen, into Pfizer. ADCs are designed to harness the targeting power of antibodies to deliver small molecule drugs to the tumor. This innovative approach to therapy offers meaningful efficacy with the goal of limiting certain side effects for patients. Seagen's expertise in ADC technology is unsurpassed, as is Pfizer's ability to deliver life-changing solutions quickly at a great scale.
With this proposed acquisition, Pfizer intends to deploy its financial, scientific, manufacturing, and commercial capabilities to advance the fight against cancer, which is the second leading cause of death in the U.S. and a leading cause of death worldwide. I can't think of a better way to realize our purpose, breakthroughs that change patients' lives. Seagen's commercial and late-stage development focus aligns with Pfizer's current oncology portfolio and pipeline. Seagen already has four cancer treatments on the market that are first or best in class across hematologic and solid tumors. These include three therapies that are ADC technology, one for certain CD30 expressing lymphomas, including Hodgkin's disease, one for metastatic bladder cancer, and one for metastatic cervical cancer. Clearly, Seagen has established a track record of delivering innovations to patients.
Seagen also has a broad and deep pipeline that includes 11 new molecular entities, many with the potential to bring treatments to large patient populations and almost all with global commercial rights. The next wave of potential breakthrough medicines that could launch before 2023 includes candidates for breast, non-small cell lung, metastatic bladder, and other cancers. Of course, these are all subject to clinical trial and regulatory success, and Seagen's next-generation ADC platform offers promise for further innovation in the field. Perhaps Seagen's greatest asset is its people. You don't create such an impressive pipeline and successful portfolio without extremely smart, dedicated, and purpose-driven colleagues. We look forward to welcoming them to our team and benefiting from their expertise and insights.
For all these reasons, we believe the addition of Seagen will help position us at the forefront of innovative cancer care and strongly complement our existing portfolio across both hematologic and solid tumors. The combination of our respective areas of strength and global footprints will allow us to maximize the potential of Seagen's capabilities and more rapidly advance even more potential breakthroughs to patients with cancer. In addition to accelerating the next generation of potential breakthroughs in cancer, we also expect this transaction could contribute meaningfully to our goal of generating an incremental $25 billion in risk-adjusted 2030 revenues through new business development transactions. Seagen expects to generate approximately $2.2 billion of revenues in 2023, representing 12% year-over-year growth, including revenue from 4 in-line products, ADCETRIS, PADCEV, TUKYSA, and TIVDAK.
These medicines are on a strong growth trajectory, with significant lifecycle programs anticipated to drive continued impact, uptake, and growth. Analyst consensus estimates these four products only generating more than $8 billion in 2030 revenue. Subject to clinical trial and regulatory success, we also anticipate Seagen's compelling pipeline to contribute over the near mid-term, potentially delivering more than $2 billion in revenues in 2030 as new medicines hit their stride following initial launches in the 2026 to 2028 time frame. Bottom line, we believe Seagen could contribute more than $10 billion in risk-adjusted revenues in 2030, and even more important, with potential significant growth beyond 2030 given the durability of the assets that we are acquiring. We are enthusiastic about numerous potential growth accelerant made possible by bringing these two companies together.
From a commercial perspective, the potential go-forward U.S. commercial infrastructure of the two companies would be three times the size of Seagen alone in the U.S., enabling enhanced reach and medical impact in a competitive oncology field. Pfizer brings deeper commercial and medical capabilities in areas such as account management and real-world evidence generation that could further accelerate Seagen's product uptake as payers, organized customers, and medical professionals learn about the benefits and safety profiles of these medicines. Pfizer has also global reach and scale and the ability to market Seagen's candidates globally. While Seagen's in-line portfolio is partnered, Seagen has global rights to the vast majority of its pipeline candidates. This represents a major potential upside for both companies. From an R&D perspective, Pfizer has a proven ability to speed clinical development via our enhanced network with investigators and sites around the world.
We are excited about the possibilities to apply this to Seagen's portfolio and to deliver new treatments to patients more rapidly. There are also existing opportunities for treatment combinations across our portfolio to create compelling therapeutic regimens. This could include finding new growth for Seagen's in-line assets, potential combination with Tukysa in breast cancer, for example, as well as for our respective pipelines. For example, in combination with our existing elotuzumab in multiple myeloma, with the potential for better patient outcomes and portfolio uplift for both products. Lastly, from a discovery research standpoint, we will seek to identify and advance new biologics with our complementary research capabilities. We will look to apply Pfizer's protein engineering design capability to advance Seagen's ADC technology and Pfizer's cancer immunology discovery capabilities to inform novel immuno-oncology antibody design.
As we believe we can achieve improved target design with Seagen's linker payload. I'm sorry. You can see, the strategic fit and possibilities for patients are significant. Dave will provide more details on both our growth expectations and the potential expense efficiencies during his remarks. Now I will take it over to Seagen's CEO, David Epstein, to share his perspective of the deal. David, before doing that, I want to thank you and for the trust, not only you, but you and the management team and Seagen's board for selecting Pfizer. I can't wait to see what we can accomplish together for patients. The floor is yours.
Thank you, Albert. We're very excited to join you and your team today to announce the combination of what I believe is two exceptional industry-leading organizations. I would first like to briefly touch on the many commonalities that I've seen between Seagen's culture and Pfizer's. In the weeks that I've spent with colleagues from Pfizer, I've been impressed with their passion, innovativeness, collaboration, and drive to help patients, which mirrors our own culture in many ways. We have much to learn from each other, and I'm confident that this is the right time for Seagen to come together with Pfizer and benefit from each other's strengths. Pfizer's footprint in clinical development, manufacturing, and commercial oncology medicines will allow globalization of Seagen's products on a scale previously unattainable. Pfizer's resources, infrastructure, scientific depth will accelerate the development of our assets.
In addition, Pfizer's current portfolio provides multiple opportunities for combination regimens with our products and pipeline, potentially further increasing the value of these assets. In that context, I believe that this is the right merger at the right time. For patients who rely on our innovations, this could have a huge impact as we look to accelerate an expanded portfolio of life-changing cancer therapies to more patients worldwide. From a Seagen perspective, it provides meaningful opportunities for employees to continue our mission while tapping into global science-driven, patient-centric networks. For Seagen shareholders, this is all-cash transaction unlocks significant value with a share price that is reflective of our R&D engine in 25 years of successful innovation. Let me briefly touch on some highlights of Seagen's technology.
Seagen has focused solely on developing targeted cancer therapies that make a difference in cancer patients' lives. We have a rich history in the development of antibody-drug conjugates or ADCs, a therapeutic class that we pioneered. 4 of the 12 approved ADCs utilize our technology, including 3 which we commercialize ourselves. They're called ADCETRIS, PADCEV, and TIVDAK. We have additional opportunities for expansion of indications of these medicines, including in early-stage bladder cancer, head and neck cancer, and others. The technology is broadly applicable across many cancer types, offering huge potential in areas of high unmet medical need. We continue to innovate in this space with novel antibodies, linkers, and payloads that we have in early clinical development or in our pre-clinical portfolio.
With that, I'm gonna turn it over to Chris Boshoff, who I've gotten to know over the last couple of weeks, who will take you through the fit between Pfizer Oncology and Seagen, also to discuss our early-stage pipeline. Chris?
Thank you, David. Today, Pfizer has an industry-leading portfolio of 24 approved innovative cancer medicines that generated $12.1 billion in revenue in 2022. Pfizer's in-line portfolio is focused on 4 broad key areas where we have pioneered several breakthroughs: breast cancer, genitourinary cancer , hematology, and precision medicine. We are also advancing an extensive pipeline of 33 programs in clinical development. From a registrational perspective, we have 4 launches anticipated in oncology this year, including 2 with blockbuster potential: elranatamab in relapse or refractory multiple myeloma, and TALZENNA and XTANDI in metastatic castration-resistant prostate cancer. Furthermore, we have an exciting late-stage pipeline for each of our key areas, including a robust clinical development program for elranatamab across earlier lines of therapy in multiple myeloma.
In breast cancer, we anticipate starting phase 3 studies later this year for our next generation CDK4 specific inhibitor and for ARV-471, an oral estrogen receptor degrader we are co-developing with Arvinas. What is especially compelling about this proposed acquisition is, as you can see, Seagen's in-line medicine and late-stage development programs, as well as their early portfolio, strongly complement Pfizer's strategic colors. Seagen is also poised to expand the impact of its therapeutic approach with its broad and deep pipeline that includes 11 new molecular entities or NMEs. Many of these have potential to reach large patient populations and almost all with global commercial rights. Many are also expected to launch before 2030, subject to clinical trial and regulatory success. I'd like to highlight three programs that we are particularly excited about.
Starting on the left is TIVDAK, a tissue factor-directed ADC approved by the FDA in September 2021 for the treatment of patients with recurrent or metastatic cervical cancer. Recent phase 1 data for TIVDAK in combination with pembrolizumab show highly encouraging confirmed objective response rate of 41%, and combination data with carboplatin demonstrate a compelling confirmed objective response rate of 55%. These data could trigger potential registration-intent doublet or triplet combination studies in cervical and head and neck cancer. Moving now to the middle graph is SGN-B6A, which is currently in dose expansion studies and for which Seagen has global rights. This is a first-in-class, highly selective proteasome inhibitor ADC targeting integrin beta-6.
Early data for B6A in non-small cell lung cancer show encouraging antitumor activity across dose levels, including an objective response rate of 33% in a heavily pretreated population with a median of 3.5 prior lines of therapy. Based on these initial data, combination studies with pembrolizumab are initiated and registration intent studies are planned for non-small cell lung cancer. Lastly, on the right is DV. This is a novel humanized antibody targeting HER2. Early data with DV have shown promising efficacy with clinical activity observed in multiple HER2-expressing tumor types, including both HER2 positive and HER2 low subsets. In a phase 2 study in first-line and second-line HER2-positive metastatic urothelial cancer, DV plus toripalimab and anti-PD-1 demonstrated a remarkable 72% confirmed objective response rate, including 8% complete remission.
Based on these promising data, the FDA granted Breakthrough Therapy Designation in HER2-positive metastatic urothelial cancer. DV is also already approved in China for HER2-positive gastric cancer and for urothelial cancer. Seagen is planning a phase 2/3 study in first-line HER2-positive, HER2-low metastatic or advanced urothelial cancer combined with anti-CD1, an additional phase 3 study in HER2-low expressing breast cancer. In summary, we believe the combination of our respective areas of strength will allow us to realize Seagen's capabilities to help us in advance even more potential breakthroughs to patients with cancer. The proposed combination with Seagen would double Pfizer's early-stage oncology clinical pipeline, presenting a significant upside opportunity. By applying Pfizer's protein engineering and medicinal chemistry capabilities, we aim to advance Seagen's ADC technology to unlock potential novel target combinations and next-generation biologics.
Pfizer's global scale and footprint, spanning commercial, medical, regulatory, manufacturing, and government relations, will complement Seagen's US capability, with the potential to ultimately deliver Seagen's promising biologics to more people with cancer globally. I'll now turn it to Dave for more details on the transaction.
Thank you, Chris. Good morning. By now you are familiar with the terms of the transaction, I'm just going to highlight a few points. We expect the transaction to be neutral to slightly accretive to adjusted diluted earnings per share in the third to fourth year post-close. Given Seagen's strong portfolio of in-line products, we anticipate an incremental benefit to earnings within the second full year post-close when you exclude the impact of financing costs. In addition, we expect to achieve nearly $1 billion in cost efficiencies in the third full year post-close of the transaction. 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.
It's important to note that there are several insignificant cost avoidance opportunities for both companies given anticipated oncology launches over the near to mid-term. These launches would otherwise have required significant incremental investments and now can be avoided given our combined infrastructure and capabilities. Our plan is to finance the transaction primarily with additional debt. The financing assumes $31 billion of new long-term debt and the balance of the purchase price from a combination of short-term financing and existing cash on hand. Given our near-term de-leveraging, we expect minimal changes to our credit rating. We remain committed to a high investment grade Tier 1 commercial paper rating. Notwithstanding the size of this transaction, we expect to maintain the financial flexibility for potential dividend increases and share repurchases in the future.
Furthermore, we anticipate that the transaction will be completed in late 2023 or early 2024, subject to the satisfaction of the closing conditions. You are familiar with this chart as we have previously shown it to illustrate our path to 2030 revenues. What I'd like to do is focus on the 2030 potential non-COVID revenues from business development. The transactions that we completed in 2022, Arena, Biohaven, GBT, and ReViral, are expected to contribute $10.5 billion of risk-adjusted revenues in 2030. As previously stated, we believe Seagen could contribute more than $10 billion in risk-adjusted revenue in 2030, assuming clinical trial success and regulatory approvals. In that event, the remaining balance of our 2030 target of $25 billion will be less than $5 billion.
Finally, and importantly, we anticipate Seagen providing continued revenue growth beyond the 2030 timeline. With that, I'd like to turn it back over to Albert to close.
Thank you, Dave. Let me quickly summarize. With this deal, Pfizer intends to deploy strong financial resources to significantly advance the battle against cancer. We plan to do so by accelerating the next generation of cancer treatments through the combination of Seagen's ADC technology with the scale and strength of Pfizer's capabilities and expertise. We believe the combination with Seagen will position Pfizer at the forefront of innovative cancer care and strongly complement our existing oncology portfolio. Regarding impact on revenues, Seagen expects to generate approximately $2.2 billion in revenues in 2023, representing 12% growth year-over-year, and subject to the clinical trial and regulatory success of Pfizer's, Seagen's current pipeline. Pfizer believes Seagen could contribute more than $10 billion in risk-adjusted revenues in 2030, with potential significant growth beyond 2030.
Of course, Dave Denton spoke about the accretion that we expect to come, not in the in the midterms. We can open now for questions. Chris?
Yeah. Sorry, just one thing before. We're aware that there were some audio issues on the webcast. We wanna remind you, we posted all our prepared remarks, you have those already, and we'll be posting the webcast as soon as possible after the conclusion of the call.
That you should be able to get the entire call, should you wish to review those. Chelsea, if you could, queue up the callers, please.
Yes, sir. At this time, if you would like to ask a question, please press the star and one keys on your touch tone phone. If at any time you find that your question has been addressed, you may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question. Our first question will come from Umer Raffat with Evercore ISI. Your line is open.
Hi, guys. Thanks for taking my question. I have a couple here, if I may. First, if you could just speak to the valuation you're paying and how you got comfortable with that number, knowing that there's feedback out there that Merck was not comfortable with the valuation approaching north of $200. Secondly, could you also clarify. We know the Pfizer SG&A plus R&D in the last three years has gone from about $20 billion to now about $26 billion. How are you thinking about the pro forma? Is it heading towards $30 billion with the additional SG&A expense? Or conversely, is there a meaningful amount of synergies we should be thinking about going forward?
Finally, on an antitrust perspective, I know historically, Seagen has programs like the BCMA, perhaps even CD40, et cetera, as well as even PADCEV in the MUC indication, which could technically, from an FTC perspective, raise questions and could perhaps delay deal close time. How are you thinking about some of those issues? Thank you.
Okay, thank you very much, Umer. Dave, why don't you take the valuation question?
Yeah. Umer, good question. I think first and foremost, obviously the company and the combination is a really strong strategic fit beyond the financials. As you look at the financial pro forma of the companies together, one, as we indicated through our prepared remarks, you see consistent and significant synergies from a go-to-market perspective on the revenue side. You can see the synergies from an S&A perspective as you put the two companies together, achieving over $1 billion by year 3. If you pro forma this out over the longer term, the return at these price levels from a shareholder perspective is actually quite attractive.
I think importantly, if you look at the companies together, the inline portfolio actually creates a floor in the sense that the revenue that the company currently creates, but also projected to $8 billion, actually creates a floor to the valuation and actually gives us potential upside as the, as the pipeline continues to mature and develop. I think, well, we're quite comfortable with where we are. This transaction will generate significant value from a returns perspective over the long term.
Thank you, Dave. Also there was a question on the SMA that it went high from 20-25. There were some reasons for that. One is that the revenue went from almost double. The other reason, and more importantly lately, it is because we are in a growth trajectory, so we are investing a lot in SMA. As I remind everyone, we are about to launch 19 new products in the next 18 months, potential, significant of $20 billion, and we are funding those new launches in a more than adequate way. Some of that was for oncology because there are significant introductions to oncology among the 19 new products.
we can see a cost avoidance here immediately because instead of building our own resources, commercial to launch these products, we can use the highly skillful field force of Seagen that is coming. Based on all the calculations that we have right now at the higher level, we anticipate that we will be able to achieve $1 billion of savings. also keep in mind that Seagen was in a very similar situation. Seagen was also about to expand in significant growth investments because they are launching also many new products. They have 14 pipeline assets, and they have 4 highly growing products in the beginning of their launches. As a result also, there will be cost avoidance there.
In SMA, we believe eventually good chunk of the synergy will come from SMA, and the same is, of course, across other lines. As regards on the trust, I will ask Doug to give you the answer, but.
Sure. We anticipate that the transaction is gonna be closely reviewed by regulators, as would be the case for any large transaction in our industry. Our technology and approaches to fighting cancer are really complementary, we think that regulators are gonna be able to see the pro-patient, pro-competitive benefit of combining Seagen's ADC technology and expertise with Pfizer's broader experience with the other types of oncology in a way that's very advantageous to patients.
Thank you. Next question, please.
Thank you. Our next question will come from Louise Chen with Cantor. Your line is open.
Hi. Congratulations on the deal, thanks for taking our questions here. First question I have for you is, now that you've got this combined platform, you know, what additional areas of oncology are you interested in or do you wanna be involved with and how do you get there?
Thank you very much. Maybe, Chris, you want to make a comment on that?
To start with, as we pointed out, our pillars remain breast cancer, genitourinary cancer, including prostate and bladder, hematology, as well as precision medicine, focusing on lung cancer and colorectal cancer. We've got significant opportunities between both companies in those four areas to expand with combinations and new indications. We'll continue to focus, and it was for us actually quite compelling that most of the molecules in development at Seagen also are placed within those categories.
Anybody wants to add anything from, William or Mikael? Next question, please.
Thank you. Our next question will come from Chris Schott with JP Morgan. Your line is open.
Great. Thank you so much for the questions. I just have two here. Can you just talk a little bit more broadly about the competitive landscape for ADCs and how you're thinking about some of the other programs that some of your peers are developing as you think about kind of the longer term landscape for these assets? The second question, I was turning my hands around. I think you're talking about the ability to accelerate development of the Seagen portfolio, and I was wondering if you could elaborate on the dynamics there. Should we think about Pfizer moving these ADCs forward faster and in more indications versus what the company was gonna do standalone? Is the opportunity here more about things like faster patient recruitment, et cetera, that Pfizer's able to do?
I'm just trying to see, are you taking kind of just directionally a bit more risk here and putting more resources or is it just that the organizational strength of the combined entity can develop these things faster than either company could standalone? Thank you.
Oh, thank you. Very good, question, Chris. Then I will give it to your same name guy, Chris Boshoff.
Okay. I'll start with, as you know, the significant growth currently in antibody-drug conjugates, with 9 of the 12 approvals since 2017, so in the last 5 years. In many indications we can see now that there's opportunities not just for combinations with immune checkpoint blockers, but also to replace some of the chemotherapeutic regimens in combination therapy. There's also opportunities for to increase further the, not only the antibody, but also the linkers as well as the payloads or the cytotoxins. This is an area, as you know, where Seagen has really been a pioneer, not only with introduction of auristatin, which we now know potentially induces immunogenic cell death in combination with PD-1 inhibitors, but also the data they're currently generating in, with new molecules, including with their Topo-1 potentially best-in-class Topo-1 payload.
We see this as an opportunity to really expand ADCs across many tumor types, not only hematologic, but also solid tumors.
May I jump also to Seagen's and maybe, Roger, you can make a comment, what is your point of view on this one in terms of what opportunities you see?
Thanks, Albert. Thanks for the opportunity to comment. I agree with Chris. You know, the whole ADC field has been validated multiple times, and we've obviously led in that area, as Chris pointed out, with our auristatin payload. You know, we see so many opportunities, both in our existing pipeline and beyond that, to innovate further, as Chris said, you know, linkers, payloads, different approaches, you know, using the basic platform of a targeted cancer therapeutic approach. We're really excited about the future and we I think together with Pfizer we are, we will, I hope, deliver on the real promise of ADCs in the future, today and tomorrow.
Thank you very much. Next question, please.
Our next question will come from Evan Seigerman with BMO Capital Markets. Your line is open.
Hi, all. Thank you for taking the question, congrats on the deal. I would love for you to kind of walk me through kind of what changed in the M&A environment for Pfizer to take on such a large transaction. You're really transforming your oncology franchise from a small molecule platform to ADCs. How do you think about the opportunity for ADCs in terms of franchise durability, IP and complexity, and really competitiveness versus other modalities out there? Thank you so much, guys.
Thank you. First of all, I don't think that anything has changed in the M&A strategy. Actually, I see a very consistency and execution of a plan, as we were very transparent about it. We had made clear that we are going to use a lot of the capital that we have accumulated. Our first priority was to acquire projects, science, products that will enhance our growth profile between the year 25 and 35. This one is a perfect example of that. We never said that we are going to do it with very small. Actually, multiple times we said that we are size agnostic. What matters it is the growth orientation, the quality of the asset. Always we are trying to get best-in-class assets and of course the capabilities of the company.
Seagen is a very, very impressive collection of all three. That's why we are going with Seagen. How we see that transforming us, clearly it's a major move, first of all. From low quartile, middle in the pack competitor in oncology, that will position us to quite a high position. We are going to significantly enhance our growth and participate in the growth for the next decade. As we said, we are traditionally very strong in small molecules. We do have we did have, by the way, expertise in ADCs, and clearly we didn't do as good job as Seagen did.
By working on ADCs, we know what works and what doesn't work, and we have enough expertise to appreciate how good the platform and how good the people of Seagen are. That's why we are investing over there. Clearly, that transforms Pfizer, that is moving to an area big time, that it is well more protected from regulators, patent perspectives, and market dynamics. The large molecules are enjoying by regulation and de facto way larger exclusivity periods. Particularly, the ADCs, because they are very complex, congregate basically of three biologics in many cases, or two. In some other, the regulatory pathway for biosimilars is very complicated and not well-defined. The durability of these assets is a way beyond the normal durability of small molecules.
Now you see the durability of the growth engine as you see it in total, with the current four products that are partnered go well into the 30s, and the new pipeline that is emerging, the growth profile doesn't stop in year 2030. Actually, it continues well below 2030 in the next decade. And that's a significant plus in our ability to become a top-line growth driver. Any way you see it is extremely compelling proposition. The fact that Pfizer is also a company that it is so skillful in small molecules will give us a great opportunity also to contribute with our own database and with our own portfolio of pre-clinical assets into the payload that a good ADC might need.
We are very, very excited with the opportunity, plus the combinations that we can do with our current portfolio. We are very, very excited. We think that this really changes dramatically the oncology presence of Pfizer. Makes it one of a kind. Next question, please.
Next, we have a question from Chris Shibutani with Goldman Sachs. Your line is open.
Thank you. Good morning. Congratulations on the transaction. Could you perhaps with two questions, one, the $8 billion revenue contribution by 2030, break down with a little bit more specifics what is embedded within that, your assumptions? Number two, your free cash flow priorities from here and onward, can you perhaps help us understand how you were thinking about the urgency with which you would repay down the $31 billion over the nearer term, and also how the triaging of other decisions, such as doing further deals to pursue this last $5 billion towards your goal versus dividend and share repurchases, balance each other out from your perspective now? Thank you.
Dave, would you like to take Chris' question?
Yeah, I'll take that. First, number one, just to clarify, what we said was $10 billion in revenue by 2030, not $8 billion, by 2030. I think we have line of sight very specifically to accomplish that. Number one. Number two, on the priorities from a capital allocation perspective, obviously the company is taking on additional debt and leverage to accomplish this transaction. The good news is the company's balance sheet and cash flow is actually incredibly strong, coming off of the COVID crisis. We still maintain the financial flexibility to continue to potentially increase the dividend going forward, despite the size of this transaction. Additionally, we have additional firepower to accomplish the incremental roughly $5 billion in revenue from a BD perspective that we're targeting by 2030.
We have time to do that and certainly have the financial flexibility to do that. Clearly, as we've discussed, as we continue to mature the company and develop this business, we'll have the opportunity to generate additional free cash flow that can be deployed into share repurchases over the long term, and we will continue to look to prioritize that in the mid to longer term at this juncture. Thank you for your question.
Thank you. Chris, we don't provide breakdown by product because I think also this is what you were trying to understand on the $8 billion, and this was actually the current consensus, to be honest, for year 2030. I think we can do better. Next question, please.
Our next question will come from Terence Flynn with Morgan Stanley. Your line is open.
Great. Thanks so much for taking the questions. Maybe two clarification ones for me. On the $10 billion in revenues, Albert, you mentioned consensus is around $7 billion-$8 billion. Just wondering what you view as kind of the deltas in your deal model relative to consensus. Is it more on the inline products? Is it on some of the pipeline opportunities? If you could just elaborate there. In terms of, I guess, the catalyst for a deal now versus last fall, I think, you know, it came out in the Wall Street Journal article that maybe you had some interest last fall. Was it the B6A proof of concept data? Just wondering if there was a, like, a pipeline catalyst or something that led you to move forward now versus last fall. Thank you.
Thank you very much. I will ask Aamir to take that and maybe I can make some comments at the end.
Sure. Terence, thanks for the question. On the $10 billion, look, at the end of the day, what we're fundamentally excited about is the inline products and the expansion of indications of those inline products, as well as the pipeline. A lot of the consensus as we see it is focused on the inline products and the expansion of indications. The incremental upside that we see to that is the pipeline. As been commented by Albert and by Chris, there's an incredibly rich pipeline of assets at Seagen that we easily see contributing $2 billion of risk-adjusted revenues in 2030 and beyond. I would also underscore that while we talk about 2030, we're also excited about what comes past 2030.
Our peak sales estimates peak after 2030, so we see the sales growing. I would also just remind you that these are incredibly durable products for lots of reasons, including how they're treated in terms of reimbursement, as well as the complexity in manufacturing. We see a very, very strong long-term growth outlook to these products.
In terms of the timing of the interest in our deal, look, we continue to monitor all opportunities at all times. For us, this was the right time to do this transaction for a host of reasons.
Very well, sir. Thank you. Next question, please.
Thank you. Our next question will come from David Risinger with SVB Securities. Your line is open.
Thanks very much. Congrats on the transaction. I have two questions, please. First with respect to the IRA legislation, could you discuss the long-term exposure for Seagen's key commercial assets as you see it? Second, with respect to integration, could you remind us about Pfizer's oncology geographic footprint and discuss how you plan to integrate Seagen from Seattle? Thank you.
Yes. Look, in terms of IRA. IRA, the only thing that is doing basically distinguishing molecules into large and small, and ask for the very large, not for all, right? Those that they are making a threshold. After a certain period of time, the government could negotiate. That's one of the aspects. There's another aspect in the IRA, which is the out-of-pocket. Let me start, which means that in a couple of years there will be an established out-of-pocket cap, but it is very, very manageable for every American, because it's going to be $167 per month for the total contributions of seniors towards their Medicare. Not for one or two, for everything that they spend, and not more than that. Both of that are affected positively, I would say.
This portfolio, the fact that they are getting 13 years because it's on the beneficial side. The fact that we have out-of-pocket caps at 167, it is also very beneficial for those that they can afford those type of treatments, but now are moving into, either they're not taking basically their prescriptions or they are, hoping in charity that, they will give it to them. Now they will be able to afford their treatments. There is also, as I said, in addition to that, the element of, there needs to be a biosimilar, to be able to negotiate the price. The existence of a biosimilar for ADC is a complicated, very complicated, issue.
It is, let me put that way, is way more durable in terms of competitive pressure from biosimilars beyond the expiration of patents or exclusivities than other assets. All of that are clearly very, very positive. Now, in terms of integration, we are very, very clear that we are not buying the golden eggs. We are acquiring the goose that is laying the golden eggs. For us, what is extremely important it is that we will maintain the Seagen capability to continue innovating and do under Pfizer's umbrella as part of our Pfizer's family, to do way more if possible, than they were able to do it alone. The locations of Seagen, both in Seattle and in San Francisco, will be maintained.
We will try, if possible, to enhance the resources rather than take them away. How exactly they will be integrated into Pfizer is going to be a question of integration team that we are going to kick pretty soon for integration planning purposes between the two companies. We will find the best way to do it. It's very clear that we want to maintain the people and we will maintain the locations in Seattle and San Francisco. Thank you very much.
Thank you.
Thank you. Our next question will come from Michael Schmidt with Guggenheim Securities. Your line is open.
Hi, good morning. This is Yibel for Michael. Congratulations on the deal. Thanks for taking our questions. Can you talk about how do you plan to leverage the unique advantage of Seagen's MMAE-based ADC to combine with PD-1 inhibitors? Specifically, would you continue to pursue combination with KEYTRUDA and some of the existing trials, or would you consider combining with your own PD-1? Thank you very much.
Although it's too early, what about that question?
Yeah, I think the, I agree with you. The main thing to state is you have to direct with auristatin, as I've mentioned, there does appear to be this enhanced activity or immunogenic cell death in combination with the PD-1. We've now seen it with PADCEV, we've seen it with TIVDAK, there's data with nivolumab and OPDIVO, and also the new data with Ticagrelor plus the PD-1. In all cases it does appear to be more than one plus one is two. We are excited to continue to work with auristatin in combination with PD-1 and of course, work with the studies that's ongoing with KEYTRUDA and in the future also then explore the next payload, including the next generation auristatin and next generation Topo-1 that's being developed by Seagen, and how they could be enhanced or not with the combination with PD-1.
Anyone wants to add something here?
I'll just add that, the pipeline contains many other immuno-oncology products that now could have a much more futuristic opportunity to be key. That includes CD47 that can engage a different cell site. We have a number of small molecule unique inhibitors. We are very excited about, in the end, chance is going to be a combination game, and by getting the scale between the two companies, you will see a lot of upside opportunities.
I would just add the safety of the profile looks very good, with the MMAE coming, which may be a challenge for some of the other pick-ups.
Thank you very much. Next question, please.
Our next question will come from Robyn Karnauskas with Truist Securities. Your line is open.
Hi. Thanks for taking my question. I have two, I guess. First, I know you mentioned that you don't see any change or cuts to R&D, could you comment a little bit on any synergies on the SG&A front? Second, just more broadly, when you're doing your due diligence, how do you view Seagen's next generation linker platform versus some other novel platforms that are out there that look more stable than the vedotin? Third question would be, how are you thinking about decision-making? Is it going to be more of an independent entity, or will you integrate it and decision-making comes from the top down? Thanks.
Yeah. One general comments on the synergies. It's true. There will be no R&D projects are going to be affected. There is no idea here that some of these projects because we are merging together, will disappear. There will be R&D synergies, as well there will be manufacturing synergies, as there will be commercial synergies. Very big part of those synergies are, as I said, are cost avoidance, because we were about to embark into that. Those cost avoidances are real dollars that would otherwise we would have seen in our investments, in the next, the year after. Right now we won. It is real and meaningful.
meaningful because we'll go to approximately $1 billion within the first 3 years, with very big chunk of that accomplished in the second year, and then the third will complete. I think it is well thought and will not affect the R&D. Obviously, naturally, it will enhance both of them. The commercial capabilities. Chris.
on the vedotin, on the auristatin payload. Yeah, where we pointed out the three approved medicines, ADCs, the pasudoximab, cetuximab is obviously using this specific the vedotin, which is the payload as well as the proprietary linker from Seagen. Seagen is clearly the pioneers in the generation, in the conceptualization and discovery of the next generation of linkers, both cleavable as well as stable. They've got a number of new in their toolbox, a number of new linkers as well as new payloads. Perhaps Roger can add something to that.
Roger, please, can you please, give us also your lights here?
Sure. Thank you. Yeah, I think that the... Just to take, for example, the vedotin payload. We see a real opportunity to widen the therapeutic index and, you know, increase the applicability by doing some modifications to sort of next generation auristatins. We have multiple thoughts and plans in that regard. As Chris mentioned, we are close. We have upcoming INDs in the year 2023, which will introduce this Topo-1 payload, a cancer type of payload, which we believe has the potential, and certainly pre-clinically, to be events in class. That's obviously a very important component.
Beyond that, in terms of, like, really novel and innovative approaches, things like delivering, you know, immune agonists and various other approaches, to potential sort of therapeutic outcomes, including new payloads, new cytotoxic payloads, that we haven't specifically disclosed, but obviously we're working on internally.
Thank you very much, Roger. Next question, please.
Thank you. Our next question will come from Trung Huynh with Credit Suisse. Your line is open.
Morning, guys. Thanks a lot. It's Trung Huynh from Credit Suisse. Two questions from me, if that's okay. Just one on the pipeline. For the Pfizer team, are there any pipeline drugs that you thought were really underappreciated by the Street when you were looking at this deal? Similarly for the Seagen team, can you highlight the next big catalysts where we can start crystallizing some of that value? Then my second question, just can I push you on FTC here? You noted that there is this increasing scrutiny on big deals, are there any divestments earmarked here that you can do to get this deal over the line? Thank you.
No, thank you. Actually, I will ask Roger to make the comments on what you think the analysts have underappreciated in the pipeline and what you think are the next catalysts. David, you can make also some comments there.
Yeah. Maybe I'll, maybe I'll take it. I think most analysts are aware we're awaiting an accelerated approval for ADCETRIS in cisplatin-eligible versus platinum-vulnerable cancer. Then we have a confirmatory trial which covers both platinum-eligible to platinum-ineligible. I think those markets are considerable in size and scope, as well as the opportunity to move into a muscle-invasive and non-muscle-invasive disease. When you look at analyst models, I think analysts are just starting to pay attention to a couple of the assets where we have global or near global rights. In particular, B six A, which we will have data later this year showing durability effect in non-small cell lung cancer, other solid tumors.
We'll have our first clinical data to share with you with a really novel ADC, which targets B7-H4. I think at least those three products are probably underappreciated. Then as Chris pointed out earlier, we will in time have some data with PV. We think this drug works, handled and is handled very well by patients and may end up becoming HER2-positive disease, particularly in bladder cancer, the new standard of care, and we're working to bring that forward in second-line breast cancer as well. A lot of what I've done since I've become CEO of my team is begin to get that story out about what Seagen can become and those estimates are not fully baked in yet into most analyst models.
Maybe I can just add a couple of comments to beyond that. Yeah. There will be other key readouts, for example, with TUKYSA, we have a study combining with Casila, which is another ADC, which we'll be reading out the second half of this year, approximately. We have some really intriguing data using ADCETRIS actually as an immunomodulator, where this ADC can significantly reduce T regulatory cells. This may be relevant as a resistance mechanism for PD-1 inhibitors. You know, beyond that, we have important information with regards to head and neck cancer and TIVDAK, which we will be sharing in the relatively short term.
The other point, which I think David may have mentioned, is we are estimating, at least for the very large global trial, which is evaluating both cisplatin-ineligible and cisplatin-eligible patients with metastatic urothelial cancer. We're estimating we'll have a readout towards the end of the year. We have a lot of data readouts, a lot of pivotal trial readouts, and obviously some of these regulatory interactions that David mentioned.
Thank you very, very much. On the FTC drug, any additional comments?
No. You know, we are focused. We understand the environment. We take it seriously. Again, we believe that the government is going to see that the complementary natures of our compounds and the value to patients.
Thank you. Next question, please.
Thank you. Our next question will come from Colin Bristow with UBS. Your line is open.
Hey, good morning, thanks for taking the questions. Maybe just to piggyback on a prior one. You've been pretty active in business development over the past couple of years. Now you have less than $5 billion of that original $25 billion goal. What should we expect over the next sort of 2 to 3 years in terms of the size and cadence of deals? Are you still open to larger deals? Should we expect you to stay within the sort of confines of this, you know, less than $5 billion remaining balance? Second, could you just talk about the process here? You know, was it competitive? Give us some color around that.
Third, maybe if we just switch gears to kind of the other side of the equation in COVID, and could you give some color on how perhaps the Comirnaty uptake has been progressing this year versus your expectations? Thank you.
Yeah. Maxgrip then commonality, I think is not the focus of this goal, so I would prefer not to comment, but it is moving. My general comment is along our expectations and nothing's changing compared to what we have said during our earnings call. Everything is online. If we are going to do more deals, clearly we have the capability to do more deals. We have the capability, after completing this deal, to be able to continue our growing dividend practice, and which we will. It is also, we have the ability to do whatever we want with the capital and remain flexibility. Targeted by buybacks if there is a need, which is not our known priority. Other business development activities because there is still $5 billion remaining.
We have the ability to execute with the current capital that we have, the $5 billion. We are not going to be very picky as we were until now. We want very, very good value for the money that we are going to have. There was a question about process. I'm not sure I remember.
Process for Seagen. Yeah.
Yeah. Why don't you take it, Aamir?
Sure. You'll obviously see the detail of the process in the background filings later. I won't comment on that. What I will just generally say is that we've had a excellent process of engagement with the Seagen team. Very collaborative. It allowed us to get access to the information that we needed that ultimately has given us conviction this was the right deal for us to do.
Next question, please.
Thank you. Our next question will come from Tim Anderson with Wolfe Research. Your line is open.
Thank you. Press reports were that Merck looked back in July. Was Pfizer actively engaged in the process back then? If not, why is it now? I'm wondering, you know, what changed? Was there some new development at Seagen that brought you into the mix, or was there some new development at Pfizer that brought you into the mix? Then on revenues, you talk about consensus for 2030 for Seagen being $8 billion. Obviously, that's a Wall Street estimate. To me it would be more relevant to know what the internal Seagen revenue estimate is and how to compare that $10 billion number to it. I'm guessing they had thfeir own forecast, didn't just rely on consensus.
The genesis of that question is really, you know, do you assume there's gonna be revenue synergies with this transaction?
Yeah. Thank you. Thank you very much. Look, I'm not going to comment if we were involved back in the day or not. All right? I mean, clearly, we are watching Seagen for many, many years. We have a team that is analyzing everything that's happening. Clearly when there were news about their activity, we looked even more. Why we were not moved when there were rumors back in the day and we move now, it is everything a question of more data, a question of the right price, a question of multiple equations, expectations from the sellers and all of that.
I think for us, looking at the whole constellation of the potential acquisition targets that could move the needle, we couldn't find something that's more strategic to us, more complementary to us, and that's why we did the deal. Now is the time that we're doing it. The question about $8 billion revenues, you're asking this is what the analysts are saying. What do you say about the 4 products? We don't give numbers for the product. We say it is 10+ for the entire thing by year 2030. It is way higher actually in our calculations by year 3, 4, 5 years later. Because the growth is continuing all the way to 35 that we have modeled, it is going very strong.
I don't want to say now how much of this it is, the 4 products or the indications that are coming. We don't do them. Let's go to the next call.
Our next question will come from Gena Wang with Barclays. Your line is open.
Thank you for taking my questions. I know a lot of a good question has been asked. I wanted to know how much you've seen the pipeline assets data from Seagen when you do your due diligence.
Chris?
Yes. Thank you very much for that question. We actually wanna thank our colleagues at Seagen because they really made available everything we asked for. To your point, certainly we saw data on most of the early molecules. They've got 11 NME coming in phase 1 and phase 2. One in phase 2, the rest in phase 1. We also saw preclinical data that's not in the public domain yet, and that likely will not be in the public domain for the next 12 months. Our scientists and researchers in La Jolla were able to really study in depth the preclinical data as well. I wanna thank our Seagen colleagues for making all of that available to us in the last couple of weeks.
Thank you. Next question, please.
Thank you. Our next question will come from Mohit Bansal with Wells Fargo. Your line is open.
Great. Thank you very much for taking this call, and congrats on the transaction. Just want to understand a little bit about the valuation here, because if I look at Pfizer's older deals like Arena and GBT, they were more in the 2-3 times peak revenue multiple range. This one, if I look at consensus, it's more like 5 times and 4 times when I look at your number. Just trying to understand what prompted you to go bit, little bit higher on the valuation map here. Is it the pipeline? Is it the longevity of the assets? Then would love to get your thoughts on the $1 billion synergies.
How do you plan to achieve them, given that Seagen has a lot of partnerships there, so there may not be a lot of room to cut costs there. Would love to understand that. Thank you.
Aamir?
Yeah. Mohit, thanks for the question. Look, every transaction is different, some of these things are difficult to compare. Let me just say this. In terms of our prior transactions, yes, those were in the 2-3x to 2030 multiple range. This is higher. We think that's very well justified for several reasons. Firstly, we are purchasing a company that is bringing with it this year, over $2 billion in existing revenue. Secondly, that revenue is growing at a very strong clip to 2030 to greater than $10 billion in our view. Thirdly, there is growth after 2030 as well, given the function of the growing pipeline as well as the durability of the ADC platform.
Fourthly, there is an inherent platform that we are valuing as part of this acquisition. When you combine those things along with the cost synergies as well as the revenue accelerators that Albert described at the beginning of the call, we think that is a very reasonable multiple. If you look at it as a multiple on the peak opportunity, you're well below the 4x that you referenced. We think that is a very reasonable multiple that's gonna generate great value for our shareholders.
What about the cost synergies?
Yeah, from a cost synergy perspective, obviously the company does have significant partnerships. We understand that. The synergies are not derived from anything related to that. As Albert indicated earlier, both companies are investing heavily to grow the business longer term. I think as we think about fitting the companies together, we'll be able to harness that investment and leverage both our infrastructure and capabilities and drive meaningful value from that perspective.
Thank you very much. The last question, please.
Thank you. Our last question will come from Geoff Meacham with Bank of America. Your line is open.
Hey, guys. Thanks for the question. I just have a couple quick ones. Historically, Seagen, you know, they're less focused on profitability, but would you say your accretion math, you know, mostly based on a greater top line or is there a cost savings component that you think will get you across the goal line, three to four years out? The second question is, you know, when you look at the valuation of the ADC platform, it seems it's a bit of a push-pull. You really have obviously higher terminal value from ADCs given minimal expertise from biosimilar competitors on one hand, but then you'll also have an IRA impact likely on ADCETRIS on the other. Just wanna get your perspectives on that. Thanks.
Thank you. On the IRA, I did give an answer, there are some provisions on the IRA that are affecting our industry. When it comes particularly to biologics, and cancer medicines and biologics, there is the issue with the 13 years that if an asset is very big, can be negotiated basic price mandated by the government. Not for all assets, for the biggest assets, it is on the best end of the IRA with the 13 years. Actually, there will be no negotiation if it's not a biosimilar in the marketplace because that's one is a condition. From that aspect, I mean, IRA, it is what it is. This is something that it is on the easier path.
I don't underestimate the impact that IRA will have on, abandonment of prescriptions and the ability of patients, to pay for more expensive drugs, ADCETRIS particularly right now. That will be significantly positive effect, I think, in cancer meds. Let me go to David about the accretion.
Yeah. As you look about the profitability question that you had, obviously it comes from both revenue and synergies, but I'll just point to the fact that it's mostly heavily weighted more to the synergies at this point in time because we have very clear line of sight to how we can achieve those through both the company's integration plans. I think they're very tangible to get to that $1 billion in a matter of at least by 3 years. With that.
Okay. Thank you very much. Any final comments from the Seagen team? Dave?
Hey, Albert. Pfizer team, we look forward to working with you. I think there's a tremendous upside partnering. I can't wait to see you again.
Thank you very, very much. We are equally excited. Thank you everyone for your interest. I think it's a great day, particularly for cancer patients, today. Thank you very much all. Bye-bye.
Thank you, ladies and gentlemen. This does conclude Pfizer's analyst and investor call to discuss proposed acquisition of Seagen. We appreciate your participation, and you may disconnect at any time.