Amgen buys Celgene’s Otezla for $13.4bn

BMS and Celgene have made the first step towards their merger, as Celgene’s blockbuster Otezla is sold for a hefty $13.4bn to Amgen.

Back in June, the FTC (Federal Trade Commission) ordered that for the BMS and Celgene deal to be approved, Celgene’s Otezla had to be sold off, as combined with BMS tyrosine kinase 2 inhibitor, it would have given the newly merged company too big of a market share.
Analysts have announced that it is good news for both parties of Amgen and Celgene, though many have commented that Amgen paid significantly more than expected. With analysts predicting the value of Otezla at $10bn, thus indicating that a bidding war helped to drive up the price.

Otezla is the world leader in treating psoriasis for patients who have progressed from topical treatments to oral treatments before trying the biologic Humira. Otezla reached sales of $1.6bn last year, demonstrating an impressive growth of 26% compared to the previous 12 months and the trajectory is expected to continue for the rest of this year.

It comes as good news for Amgen as Otezla fits well into its existing anti-inflammatory and psoriasis portfolio. Which includes recently successfully defended Enbrel and its Humira biosimilar Amgevita which is already approved in Europe and expected to hit the US markets in 2023. It also provides a plus for Amgen in the form of further license extensions. And with Amgen’s impressive salesforce pushing Enbrel to $5bn a year sales, once they get their hands on Otezla similar results can be expected.

The drug has patent exclusivity through at least 2028 in the US and Amgen has stated that it believes Otezla can at least achieve an average of least low double-digit sales growth over the next five years.
Analysts have also commented on the promising phase three trials in scalp psoriasis and paediatric plaque psoriasis that could promise future growth.

However there are some concerns about whether the FTC will approve Amgen acquiring Otezla. If the FTC did not approve of BMS tyrosine kinase type two inhibitor and Otezla, will it approve Amgen’s now significant portfolio of Enbrel and Amgevita.

With Otezla out of the picture, BMS and Celgene anticipates the merger closing by the end of 2019 rather than the predicted early 2020. BMS has also stated it will use the $13.4bn, to pay of its debts faster and to increase a post planned post-merger share re-purchase from $5bn to $7bn.

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