Amgen Boosts Rare Diseases with Horizon Buy

15.12.2022 - Amgen has agreed to buy Horizon Therapeutics for $28.3 billion including debt, boosting its portfolio of drugs for rare autoimmune and inflammatory diseases and beating rivals Sanofi and Johnson & Johnson, as well as a fourth unnamed company.

The purchase gives Amgen access to two of Horizon’s fast-growing therapies – Tepezza for thyroid eye disease and Krystexxa for gout – which analysts estimate will together generate sales of $3.6 billion this year, rising to $5.8 billion in 2027.

Describing the deal as “a compelling opportunity,” Amgen chairman and CEO Robert Bradway said: “The potential new medicines in Horizon’s pipeline strongly complement our own R&D portfolio. The acquisition of Horizon will drive growth in Amgen’s revenue and non-GAAP earnings per share and is expected to be accretive from 2024.”

Under the terms of the deal, Amgen will pay $116.50 in cash for each Horizon share, representing a premium of about 20% to the stock’s closing price on Dec. 9. The transaction is expected to close in the first half of 2023, pending shareholder and regulatory approvals.

Analysts were cautious in their response to the move, which is reported to be the largest pharma transaction since AstraZeneca’s $39 billion purchase of Alexion in 2021.

“The Horizon deal uses up most of, if not all of Amgen’s near-term dry powder [for deals],” Evan Seigerman, analyst at BMO Capital Markets told British newspaper the Financial Times, adding that the acquisition would add more than $17 billion to the company’s existing debt of about $39 billion. However, he said the deal should help Amgen come close to achieving its 2030 sales goal, estimated at $35 billion.

Amgen has been particularly active on the acquisition front in the past couple of years. It paid $3.7 billion in October for biopharma ChemoCentryx and in 2021, bought Teneobio in a deal worth up to $2.5 billion and Five Prime Therapeutics for about $1.9 billion.

In its Pharmaceutical & Life Sciences: US Deals 2023 Outlook published this month, PwC is forecasting more mergers and acquisitions in 2023, totaling between $225 billion and $275 billion, significantly up on the $137.8 billion in 2022 (excluding the value of the Amgen/Horizon deal).

“Ample corporate cash, the need to continue to invest to address medium-term pipeline gaps and the resetting of biotech valuations will provide the backdrop for an active year,” PwC said. But while pharma and biotech deals will continue to focus on oncology and immunology, there will also be interest in other areas such as central nervous system and cardiovascular diseases, and vaccines.

Author: Elaine Burridge, Freelance Journalist