Investors delighted as Amgen & Alexion deal resurfaces

Rumors have been circling for the past year that Amgen is looking to strike a deal with Alexion pharmaceuticals to prop up their pipeline. Now that this rumor has resurfaced again, investors are delighted as a deal would help prop Amgen against the $2bn fall it is expected to face as two of its blockbusters Neulasta and Sensipar are set to experience biosimilar competition. An Amgen-Alexion deal would boost earnings for Amgen next year and lead to a 20% earnings accretion by 2024.

On Wednesday, Spain’s Intereconomia reported that Amgen is on the verge of acquiring Alexion for $200 per share. Analysts are skeptical about the validity of this source, but this has not stopped Alexion’s stocks from shooting up by more than 7% to $123.49.

Alexion has long been on analysts watch list for companies that are likely to be acquired particularly due to its profitable but manageable pipeline of drugs such as its $3bn a year drug Soliris which treats rare blood and neurological diseases. As well as its low valuation, with the company’s share price being mostly flat since it received approval for its product Ultomiris last year.

 Amgen continues to face pressure from investors to engage in a big biopharma merger, with analysts looking into reasons why Amgen seems so hesitant. Some believe it could be due to recent Federal Trade Commission (FTC) decisions, that seem to be having a stricter and stricter approach to big deals, such as its insistence for Celgene to divest its blockbuster Otezla.

Amgen has stated before that “it struggled to find transactions at prices that we think can earn a return for our shareholders. But again, we continue to look for opportunities and fully expect that by being disciplined we’ll find ones that enable us to win for our shareholders and to invest in programmes that can help us grow the company.”

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