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Hawk’s Nest

Unusual Option Trades Catch Pfizer Deal for SeaGen

by | May 29, 2023

SeaGen (SGEN) on of our top winners this year after flagging a bunch of bullish option trades signaling the potential for M&A remained and then Pfizer announced a buyout offer and shares traded above $200 from our write-up when shares were near $120.

The original write-up on 1/19 was as follows:

Seagen (SGENwith a large buyer of 2000 February $140 calls for $1.1M on 1/9 in a name that has seen a lot of its notable open interest expire. SGEN also saw sellers of March $145 calls to open 990X on 1/18 and has traded large buy-writes against June $150 and January 2024 $170 calls 3000X each. SGEN put in triple bottom support at $120 and has formed an inverse head and shoulders pattern that targets a move to $157 on a break above $137 which would align with a gap from August. SGEN needs to hold $124.50 support to stay in an uptrend. Seagen is a biotechnology company that develops and commercializes targeted therapies to treat cancer and is commercializing ADCETRIS®, or brentuximab vedotin, for the treatment of certain CD30-expressing lymphomas, PADCEV®, or enfortumab vedotin-ejfv, for the treatment of certain metastatic urothelial cancers, TUKYSA®, or tucatinib, for the treatment of certain metastatic HER2-positive breast cancers, and TIVDAK®, or tisotumab vedotin-tftv, for the treatment of certain metastatic cervical cancers. SGEN has a market cap of $24B and trades 9.5X FY23 EV/Sales and 13.7X Cash with revenues seen rising 24% in 2023 and 35% in 2023 while profitability seen in 2024. SGEN has 4 approved drugs. All of them have development plans, all of them are looking for label expansion. PADCEV in combination with KEYTRUDA in first-line metastatic bladder cancer is a catalyst the FDA recently looked at that data and granted a priority review date of April 21, 2023. SGEN also has EV-202 data expected in the first half of 2023 and ADCETRIS overall survival data into the label if granted by the FDA will help ADCETRIS continue to grow nicely going forward. SGEN sold off in August after Bloomberg reported that Merck’s takeover bid for Seagen stalled on price concerns but indicated talks could resume. Analysts have an average target of $160 with short interest low at 1.3% of the float. Truist started shares at Hold with a $135 target in November citing concerns of Tukysa and Tivdak missing consensus numbers near-term as well as Padcev competition. Baker Brothers has a $6.4B position as 41.8% of their portfolio.”