How has the news of the acquisition moved AMGN shares since the announcement?

key takeaways

  • Amgen is buying Horizon Therapeutics for just over $26 billion, or $116.50 per share.
  • Horizon has two main drugs, Tepezza and Krystexxa, a treatment for thyroid eye disease and a treatment for chronic gout; both are infusions.
  • The deal helps Amgen smooth revenue as two of its drugs near the end of their patents.

Pharmaceutical mergers are nothing new. Large pharmaceutical companies are often looking for smaller pharmaceutical companies with successful products to add to their portfolio due to the cost and timelines associated with in-house treatment research and development.

Add to this mix the time it takes for a drug to go through clinical trials and get to market, and it’s no surprise that some companies buy others to fill out their portfolios. Amgen did this when it announced it would buy Horizon Therapeutics.

Here’s what the deal means for both companies.

Amgen buys Horizon Therapeutics

Amgen announced the acquisition of Horizon Therapeutics on December 12, 2022. The company is paying more than $26 billion, or $116.60 per share, for Horizon. The purchase price per share is significantly higher than Horizon’s closing price of $78.76 prior to the announcement.

Amgen won a bidding war for the company against rivals Sanofi and johnson and johnson. The deal represents the largest biopharmaceutical deal of 2022 and provides Amgen with another division that develops medicines to treat rare diseases.

Who is Amgen?

Amgen is one of the world’s leading biotechnology companies. The company had revenue of $6.7 billion in the third quarter of 2022 and is estimated to earn up to $26.3 billion for the year.

It currently has more than 20 products on the market, with Enbrel, Prolia and Otezla making up a large portion of sales. With some drugs nearing the end of their patents, Amgen is looking for a way to smooth revenue while it waits. more data from trials and FDA approval of other drugs.

In mid-2022, Amgen closed its deal to buy ChemoCentryx, which focuses on developing drugs for autoimmune disorders.

Who is Horizon Therapeutics?

Horizon Therapeutics PLC is a biopharmaceutical company headquartered in Dublin, Ireland, with operational headquarters in Lake Forest, Illinois. Its main market is the US.

The drug maker researches and develops drugs for rare diseases, including thyroid eye disease and gout. His drug for thyroid eye disease, Tepezza, had more than $1 billion in sales in its first year on the market. This medication is only available in the US.

Other drugs manufactured by Horizon Therapeutics and their 2021 annual revenue include:

  • Krystexxa: $565.5 million
  • Ravicti: $291.9 million
  • Procysbi: $189.9 million
  • Actimmune: $117.2 million
  • Uplizna: $60.8 million
  • Bphenyl: $7.9 million
  • Quinsair: $1 million
  • Pennsylvania: $191.6 million
  • Lightning: $56.9 million
  • Duexis: $74 million
  • Vimodo: $8.4 million

Why is Amgen buying Horizon Therapeutics?

Adding Horizon Therapeutics to its portfolio helps Amgen advance its plan to enter the treatment of rare diseases through medicines. It also allows the company to anticipate the expiration of its profitable drug patents.

Amgen’s key drugs are Otezla, a psoriasis therapy, and the arthritis drug Enbrel. Both have been great performers for Amgen, but will lose their protected status in a few years.

The purchase of Horizon Therapeutics allows Amgen to maintain and improve its profitability. Enbrel’s sales fell 14% during the first quarter of 2022, although sales recovered during the second and third quarters.

Another reason for the deal is that the FDA has granted Tepezza orphan drug status, giving the manufacturer exclusive marketing rights and financial incentives to further develop rare disease treatments.

Finally, Horizon has more than 20 drugs in development, all at various stages of investigation. Add this to the handful in the Amgen pipeline, and there is the potential for significant revenue streams in the years to come.

Amgen Stock Performance Since Announcement

Amgen shares closed at $281.99 on November 29, 2022, when news broke after hours that Horizon was in talks with Amgen, Janssen and Sanofi. It then rose to close at $286.40 during the first trading day after the news. AMGN closed yesterday at $264.75, still up 16.74% year-to-date.

When the deal was officially announced, Amgen’s shares fell slightly. This is typical when one company agrees to buy another, as investors fear the acquiring company will overpay for it or issue new debt to complete the purchase.

Horizon Therapeutics Stock Performance Since Announcement

Horizon Therapeutics shares rose on news that the company is in talks to be purchased. The stock closed at $78.76 and opened the next day at $102.65, a gain of 30%.

When the Amgen deal was announced, Horizon shares rallied again, closing at $97.29 the night before and opening at $111.55 the next day.

Bottom line

With this deal, Amgen’s future is better than ever. While the company has some major drugs coming off their patents, it has many others in the pipeline to make up for lost revenue. However, it will take time for approval.

In the meantime, Amgen can fill the void with Tepezza. From there, any drugs in Horizon’s pipeline could make this deal even sweeter for Amgen if they become blockbuster treatments, too.

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