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A potential buyout of Seagen by Pfizer—which was reported Sunday by The Wall Street Journal—makes “strategic sense for both parties and the antitrust hurdle appears surmountable,” Berenberg Capital Markets wrote in a note to investors.

Talks are in the early stage between the companies, according to the WSJ report. Seagen is valued at $30 billion, and a deal could be worth “north of $40 billion,” Berenberg said, which would make it the industry’s largest since 2019.

Flush with cash after scoring a record $100.3 billion in revenue in 2022—fueled by sales of its COVID-19 products Comirnaty (vaccine) and Paxlovid (oral antiviral)—Pfizer is primed to make a major deal.

While COVID products have caught the limelight, Pfizer’s oncology business is in need of a rejuvenation. Thanks to new competitions, Pfizer’s largest oncology asset, breast cancer drug Ibrance, has been on decline. Collaboration revenue around Astellas-shared prostate cancer med Xtandi has been flat. And Pfizer’s commercial and pipeline portfolios lack new star products that could move the market.

Seattle cancer specialist Seagen is an attractive target with four commercial medicines and many more likely coming in its deep pipeline full of antibody-drug conjugate candidates. The company hit $2 billion in revenue last year, for a 25% increase from 2021.

“It is Pfizer’s policy not to comment on market rumors or speculation,” the company said on Monday. Seagen did not respond to a request for comment.

Seagen was in talks last year with Merck for a buyout that was rumored to be worth in excess of $40 billion, but the parties could not agree on a price, Bloomberg reported in August.

Rumors began to swirl about a potential deal shortly after the resignation in May of Seagen co-founder, then-chairman and CEO Clay Siegall, following a domestic violence arrest. But any potential deal appeared off the table four months ago, when Seagen appointed Novartis oncology veteran David Epstein as its new CEO.

With its COVID windfall, Pfizer has been an active player in the M&A market. Last year, the company pulled off two of the top three deals in the industry—paying $5.4 billion for sickle cell disease specialist Global Blood Therapeutics and $11.6 billion for Biohaven and its migraine therapy Nurtec.

Pfizer has made oncology-themed acquisitions, too, after its $14 billion Medivation buyout in 2016 and the $11.4 billion takeover of Array BioPharma in 2019. In a smaller deal, Pfizer in 2021 splashed out $2.3 billion to swallow immuno-oncology player Trillium Therapeutics.

A potential buyout may make sense for Pfizer but not so much for Seagen, cautions William Blair analyst Andy Hsieh, Ph.D., who points out that since Epstein “recently completed an extensive internal review to best position Seagen for long-term growth, we would be surprised by a decision to sell the company, unless it transacts at or above the previously reported price of $40 billion.”

But a high price might be worth it, according to Berenberg analyst Zhiqiang Shu, Ph.D. He points out that Pfizer has established a goal of obtaining $25 billion in revenue by 2030 from business development deals and that Seagen is projected to reach revenue of $11 billion in 2030, according to Visible Alpha.

While antitrust concerns might have helped torpedo the potential Merck-Seagen deal, Berenberg doesn’t see those as problematic with a potential Pfizer-Seagen merger because of “limited overlap.”

As for the possibility of cutting short Epstein’s CEO career, Berenberg figures that he could receive “at least $5.6 million in severance.”

A Pfizer-Seagen deal would likely become the largest in the biopharma industry since AbbVie’s $63 billion buyout of Allergan in 2019. The same year, Bristol Myers Squibb snapped up Celgene for $74 billion. The top acquisition last year was Amgen’s $27.8 billion buyout of Horizon Therapeutics.