Amgen Inc. will pay $13.4 billion for a psoriasis drug from Celgene Corp., which is shedding the asset in order to win antitrust regulators' approval for its $74 billion merger with Bristol-Myers Squibb Co.
The all-cash deal will give Amgen a growing product at a time when the biotechnology drugs it made its name on are beginning to fade. For Celgene and Bristol-Myers, the divestiture will pave the way to one of the pharmaceutical industry's largest mergers of the past decade.
The price is $11.2 billion once future cash tax benefits are taken into account, Thousand Oaks, Calif.-based Amgen said in a statement Monday. Bristol-Myers also expanded a share buyback plan to $7 billion, from $5 billion.
Bristol-Myers has a competing psoriasis drug in development, and in June announced its plan to divest Summit, N.J.-based Celgene's Otezla. The psoriasis drug had sales last year of $1.61 billion, and is expected to bring in revenue of $2.71 billion in 2023, according analysts' estimates compiled by Bloomberg.
Shares of all three companies rose after the announcement: Bristol-Myers closed up 3.3% Monday and Celgene rose 3.2%. Amgen closed up 3.2%.
Antitrust authorities have taken an increasing interest in pharmaceutical deals, which have in the past attracted less scrutiny. Along with the U.S. Federal Trade Commission's scrutiny of the Celgene deal with Bristol-Myers, the agency is also looking at Roche Holding AG's planned acquisition of gene-therapy company Spark Therapeutics Inc.
Antitrust divestitures can present a chance for acquirers to bargain-shop, since the selling companies need to shed the asset to achieve their larger objective. But Celgene and Bristol-Myers may have bucked that trend. Earlier this month, Jefferies analyst Michael Yee said $8 billion would be the benchmark for a cheap price. And in July, Mizuho analyst Salim Syed put a $10 billion high-end price on the drug.
The deal is contingent on Celgene and Bristol-Myers getting final antitrust approval. Bristol-Myers had previously said it expected the deal to close by the beginning of 2020. On Monday, Bristol-Myers said it now expects the deal to close by the end of this year.
Psoriasis is a disease of the immune system and causes a sometimes-painful rash when it flares up. An estimated 8 million Americans are affected by psoriasis, according to the National Psoriasis Foundation. Otezla is approved for what's known as plaque psoriasis, the most common form of the disease, as well as psoriatic arthritis.
Information for this article was contributed by Thomas Mulier and Cristin Flanagan of Bloomberg News.
Business on 08/27/2019