Mergers & Acquisitions

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>>> Amgen Delves Further Into Immune Therapies With Horizon Deal


Bloomberg

Dec 2022

by Dinesh Nair, Katie Roof and Angelica Peebles


https://www.msn.com/en-us/money/companies/amgen-to-buy-horizon-therapeutics-in-27-8-billion-deal/ar-AA15boCe?cvid=783ceba35ad741849a60e74acb7763f0


(Bloomberg) -- Amgen Inc. agreed to buy Horizon Therapeutics Plc for about $27.8 billion in its biggest-ever acquisition, deepening its commitment to treatments for autoimmune, inflammatory and rare diseases.

Amgen will pay $116.50 a share in cash, the companies said in a statement Monday, for a premium of about 48% since Horizon Therapeutics disclosed on Nov. 29 that it was in early talks with three suitors. The announcement confirms an earlier report by Bloomberg News.

Horizon shares gained as much as 15% to $112 as of 1 p.m., their highest intraday level since April. Amgen’s fell 1.5%.

Horizon’s therapeutic focus overlaps with that of Amgen, the maker of the Enbrel treatment for autoimmune ailments like psoriasis and ankylosing spondylitis. Such therapies are often tested and used in a wide variety of indications after inititally reaching the market, which can add to sales. Horizon gets almost half its $3.6 billion in annual sales from Tepezza, a treatment for a painful autoimmune condition called thyroid eye disease. In October, Amgen acquired another drug company with a similar immune focus, ChemoCentryx Inc.

Emerging from the exhausting focus on Covid-19, big drugmakers are resuming their search for innovative therapies, especially for those that treat rare diseases and cancer. The deal for Horizon is the biggest in pharma since AstraZeneca Plc bought Alexion Pharmaceuticals for $39 billion in 2020. Horizon is developing drugs for conditions including lupus, alopecia, arthritis and kidney transplant rejection.

Amgen in particular is contending with the threat of diminished revenue as some of its biggest products face the loss of patent protection in the coming years.

“That Amgen is looking for larger deals is not surprising,” given expected erosion of its base business, Wolfe Research analyst Tim Anderson said in a note. “Most often it is companies with future holes to fill that do bigger deals.”

Horizon Therapeutics' acquisition makes a "good strategic and financial sense" for Amgen, says Mizuho's Salim Syed

The deal has the potential to provide a sales boost to Amgen, executives said on a call with investors.

“We’ve admired Horizon’s success for some time and we’ve studied their business closely through time as well,” Amgen Chief Executive Officer Robert Bradway said. “And when presented with this opportunity, we were prepared to move quickly.”

Murdo Gordon, Amgen’s executive vice president for global commercial operations, declined to project potential revenue, citing securities rules in Ireland, where Horizon is based. He said that rapid growth of several of Horizon’s drugs in the US may foreshadow similarly trends in other countries.

“As we secure reimbursement and launch the products in other countries, you can imagine that there’s a lot more growth to generate,” he said.

Sanofi SA dropped out of the running for Horizon Sunday, saying the price had gotten too high, following in the footsteps of a Johnson & Johnson unit earlier this month. The French drugmaker said the “transaction price expectations do not meet our value creation criteria.”

Outperformed Rivals

Thousand Oaks, California-based Amgen has far outperformed those rivals this year, with its stock rising 24% through Friday to a market value of about $149 billion. Amgen last month reported revenue and profit that beat analyst estimates as 11 drugs had record quarterly sales and the company kept operating expenses in check.

Amgen said the purchase of Horizon is expected to increase earnings per share, on a non-GAAP basis, starting in 2024. It anticipates $500 million in annual pre-tax cost savings by the end of the third fiscal year after completion.

Amgen will fund the purchase with a $28.5 billion bridge credit facility from Citigroup Inc. and Bank of America Corp. This is the second time this year the banks have teamed up to advise and fund a large deal, following their work on Philip Morris International Inc.’s purchase of Swedish Match. Amgen had almost $11.5 billion in cash and equivalents at the end of the third quarter.

Horizon, which is traded on the Nasdaq exchange and headquartered in Dublin, has US operations in Deerfield, Illinois, and Rockville, Maryland.

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