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On August 26, Amgen (AMGN) announced the purchase of Celespene's flagship immunological drug Otezla (CELG) for a cash consideration of $ 13.4 billion. The transaction is valued at a net counterpart of approximately $ 11.2 billion, excluding the current value of $ 2.2 billion of future cash savings. Amgen plans to finalize the agreement by the end of 2019.
Background as Amgen buys Otezla
After this announcement, Amgen's stock price was $ 204.75, which is 2.85% higher than yesterday's close. The rise in the share price, despite the high purchase price offered to Otezla, reflects the general optimism of investors for this transaction.
Amgen already enjoys a prominent place in the field of immunology with its biological drug, Enbrel. The company also launched Amgevita, a biosimilar version of Humira AbbVie's Humira, in some European markets. Investors expect Amgen to leverage its strengths in the field of immunology to advance Otezla's revenue trajectory.
However, investors began to question the possibility of a transaction with Amgen-Alexion Pharmaceuticals. Amgen devoting significant resources to the acquisition of Otezla, the chances of another major acquisition by the company seem rare.
Alexion Pharmaceuticals share price fell 2.78% from the previous close and today trades at around $ 112.12. To learn more about the rumors of a probable deal with Amgen-Alexion Pharmaceuticals, please refer to Alexion's acquisition of Amgen: does that make sense?
How could Otezla benefit Amgen?
The acquisition of Otezla is expected to be accretive to Amgen's revenues and non-GAAP EPS immediately following completion of the transaction. Amgen expects Otezla to report revenues of nearly $ 1.9 billion in 2019. The company expects double-digit growth in its one-year sales over the twelve months to the end of the year. 2024. As a result, Amgen expects Otezla to accelerate its revenues in the short and long term. growth.
Otezla should also strengthen Amgen's position in the US and international markets. The drug is FDA approved in three indications in the United States and is currently approved in 54 other countries. The drug's patent portfolio is expected to protect the drug from generic erosion in the United States at least until 2028.
The Otezla divestment is related to the merger of Bristol-Myers Squibb and Celgene
The completion of the Otezla divestment is of paramount importance for the completion of the Bristol-Myers Squibb (BMY) merger with Celgene. The $ 74-billion Bristol-Myers Squibb-Celgene mega-merger has seen many twists since its announcement in January. Finally, the shareholders of both companies voted in favor of the transaction in April. For more information, please see What investors should know about the BMY-CELG deal.
However, in June, Bristol-Myers Squibb announced a revised schedule for the completion of its merger with Celgene. Instead of the previous calendar of the third quarter of 2019, the transaction should now be finalized by the end of 2019 or early 2020.
The delay in timing has been attributed to the need for the Otezla assignment as a prerequisite for obtaining FTC approval. Investors at Bristol-Myers Squibb and Celgene did not welcome this news. For more information, please see Bristol-Myers Squibb: Losing Otezla could be difficult.
In this context, the announcement of the Otezla divestment is considered a major positive development for Bristol-Myers Squibb and Celgene. Today, Bristol-Myers Squibb's share price is up 2.92% from its previous close and is trading at close to $ 47.93.
Celgene's stock price also jumped 2.83% from its previous close and is trading today at $ 96.65. The announcement of the Otezla divestment is a step forward in removing the obstacles for the Bristol-Myers Squibb-Celgene deal.
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