Amgen to buy Celgene psoriasis drug Otezla for $13.4 billion

By Michael Erman and Manas Mishra (Reuters) - Amgen Inc will buy Celgene Corp's psoriasis drug Otezla for $13.4 billion in cash, clearing the way for Bristol-Myers Squibb to go ahead with its $74 billion deal for Celgene by the end of the year. Amgen, which announced the deal on Monday, is paying a hefty price for the drug, according to analysts and investors

Reuters August 27, 2019 02:05:46 IST
Amgen to buy Celgene psoriasis drug Otezla for $13.4 billion

Amgen to buy Celgene psoriasis drug Otezla for 134 billion

By Michael Erman and Manas Mishra

(Reuters) - Amgen Inc will buy Celgene Corp's psoriasis drug Otezla for $13.4 billion in cash, clearing the way for Bristol-Myers Squibb to go ahead with its $74 billion deal for Celgene by the end of the year.

Amgen, which announced the deal on Monday, is paying a hefty price for the drug, according to analysts and investors. Still, Otezla, which brought in sales of $1.61 billion last year, will deliver growth for Amgen right away, and its shares rose around 3 percent in afternoon trading.

Bristol-Myers and Celgene's shares were both also up around 3 percent.

New York-based Bristol-Myers said in June that it would sell Otezla to allay concerns raised by the U.S. Federal Trade Commission because of a competing treatment that it is developing. Analysts said at the time that they were expecting Otezla to sell for around $8 billion to $10 billion.

Bristol-Myers said in a statement that there was significant interest from multiple potential buyers from early on in the process.

Thousand Oaks, California-based Amgen said that it expects Otezla's sales to grow at least in the low-double digits over the next five years. It also said it expects the drug's patents to protect its exclusivity in the United States until 2028.

(For an interactive on Otezla sales click here: https://tmsnrt.rs/2Nyrux4)

Jeff Jonas, healthcare portfolio manager at Gabelli funds, said that a number of Amgen's current drugs face loss of patent protection and competition from biosimilar drugs, so the growth from Otezla would be welcome.

"This is an attractive product for them that fits more or less with their current portfolio," Jonas said. "It's an approved product with a good safety profile, so there's not a lot of risk."

Still, Jonas expressed some scepticism about Amgen's growth forecast for the drug, noting that new competitors, including Bristol-Myers' drug in development, are likely to eat into its market share.

Amgen said it expects the deal to produce tax benefits with a present cash value of $2.2 billion, reducing the actual deal total to $11.2 billion.

With respect to possible antitrust concerns about the purchase, Amgen said on a conference call that it feels very confident that it will be able to close the deal.

Bristol-Myers said most of the proceeds from the sale will go to pay down debt from the deal with Summit, New Jersey-based Celgene. It also increased a previously planned $5 billion accelerated share buyback to $7 billion.

(Reporting by Manas Mishra in Bengaluru; Editing by Arun Koyyur and Steve Orlofsky)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.