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: Amgen wins battle for Horizon Therapeutics, bolstering its rare-disease portfolio

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Amgen Inc. said Monday that it’s acquiring Dublin-based Horizon Therapeutics in a roughly $28 billion deal that is the biggest in the healthcare sector in 2022.

Amgen
AMGN,
-0.96%

will pay $116.50 for each Horizon share
HZNP,
+15.33%

owned, equal to a 47.9% premium over the stock’s closing price on Nov. 29, the day before the deal was first mooted. It’s equal to a premium of 19.7% over the stock’s closing price Friday of $97.29.

Horizon develops treatments for rare autoimmune and inflammatory illnesses. Its key product, Tepezza, is a treatment for eye bulging and thyroid eye disease that has so far only been approved for use in the U.S.

Tepezza, as well as Krystexxa, a treatment for chronic gout, and Uplizna, a treatment for a rare eye disorder called neuromyelitis optica, are viewed by Amgen as Horizon’s key assets, according to Mizuho analyst Salim Syed.

The companies are betting on growth from life-cycle opportunities, such as label expansion and new formulations and presentations, as well as geographic expansion, he wrote in a note to clients following an Amgen call with analysts to discuss the deal.

Syed said the call revealed limited news beyond the initial statement, with Amgen citing restrictions related to Ireland’s takeover rules.

Amgen said it expects the deal to generate robust cash flow, with the companies drumming up about $10 billion in combined cash flow over the 12 months through the third quarter of 2022. It’s expected to boost non-GAAP per-share earnings from 2024 and to lead to pretax cost savings of at least $500 million by the third year after close.

See also: Get ready for more merger mania in the pharma sector for the rest of the year

Amgen expects the regulatory approvals and other conditions under the Irish business code to be achieved by the first half of 2023. 

The company declined to update its previously issued 2030 guidance for more than $35 billion in revenue but said the deal would be additive to the strategy outlined in February to achieve that goal, said Syed.

“Given the potential of today’s deal in bringing about $5-6 [billion] in additional revenue, we’d argue that an updated 2030 long-term guidance was arguably in order,” said the analyst, who has a neutral rating on Amgen stock.

The company is aiming to expand Horizon’s assets to new markets, notably China, where it has focused on its general-medicine portfolio. For Tepezza, the company is expecting Japan to be the biggest market outside the U.S.

Amgen beat out two rivals, France’s Sanofi
SAN,
-0.24%

and Johnson & Johnson’s
JNJ,
+0.77%

Jannsen unit, after Horizon acknowledged it was reviewing takeover offers following a Wall Street Journal report.

The deal is Amgen’s second in the rare-disease drug space this year, after it acquired ChemoCentryx Inc. for $3.7 billion in cash in August.

Amgen shares were down 1.5% on the news, while Horizon rose 15%.

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