Amarin Corp Plc (AMRN)

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Outbidding 14 others and then themselves: How Amgen spent $2 billion on a biotech that had been on the brink

Jason Mast
Editor

In the summer of 2020, you could get a share of Five Prime Therapeutics for less than a latte, but the company’s leadership knew that could soon change.

Five Prime was nearing a readout on their Phase II trial for gastric cancer. If it proved successful, it could return them to the perch they had lost in 2017, when a Bristol Myers Squibb-partnered drug flopped and tanked their shares. So they met with the board twice in June and twice in August to decide what would come next.

The company’s fate hung in the air. There was also the strong possibility the new trial could fail like the previous one, and the stock entered black coffee price territory. And their SEC filings indicated that while they were not running out of money, they were not swimming in it either.

Word came on November 8: The trial was a success. Patients in control saw their tumors progress 2.1 months sooner than patients on the drug arm. The drug will still have to prove itself in Phase III, but the readout has already proved a lucrative swing for Five Prime and its shareholders, after Amgen put down $2 billion this month to purchase a company that months prior had been staring at an uncertain future.

Despite press release quotes about “tremendous complementarity,” the Amgen-Five Prime buyout didn’t come out of a deep ongoing relationship between the two biotechs or Amgen’s unique ability to commercialize the drug. The two companies had spoken about a collaboration as far back as 2019, but after the Phase II news came in, Five Prime wasn’t particularly picky: Starting on Nov. 23, they gave presentations to 15 different potential partners in less than a month. The board then sent letters soliciting bids to 13 of them.

Of those, five different companies emerged as leading contenders. Amgen wasn’t the first to try to acquire the biotech, instead, another company, Party C, submitted a bid on Jan. 27 to acquire Five Prime for $25 per share, or around $1.2 billion. Amgen put in their first offer to collaborate two days later.

The board reviewed the two bids, along with partnership proposals from two other companies,  and decided to reach out to everyone who might be interested — including those who had already dropped out of the process — to say that they had received a buyout offer and were looking for other bids.

Amgen, Party C and a third Party D emerged as the leading contenders, getting ushered through presentations and data rooms. Party D, though, dropped out on February 18, the same day Amgen sent an offer to buy out the company at $32 per share. Party C called the next day, saying they could go in the high $20s or low $30 but wouldn’t be submitting a formal bid.

Five Prime told them a few hours later that they’d need to put down more. They told Amgen the race was competitive and to bring their final offer.

That offer came on March 1, at $38 per share. Amgen CEO Bob Bradway would herald the deal, but he had bid against himself. Party C had called the day before to say they were dropping out, unable to offer more than high $20s, low $30s.