- Amgen on Monday said it will buy the psoriasis and arthritis drug Otezla for $13.4 billion, acquiring from Celgene an on-market complement to its aging top-seller Enbrel.
- Federal regulators required Otezla's sale — a rare instance of an approved blockbuster drug changing hands — as a condition for allowing Celgene's acquisition by Bristol-Myers Squibb to proceed. That box checked, Bristol-Myers now expects its deal to close by the end of the year.
- Wall Street analysts considered Amgen, along with Gilead and Johnson & Johnson, as likely bidders for Otezla, but had predicted the drug would fetch a lower price in the range between $5 billion and $10 billion. Last year, Celgene earned $1.6 billion in global sales of Otezla.
Amgen gave its investors a deal, just not the one rumored last week to be in the large biotech's sights.
The Thousand Oaks, California-based drugmaker isn't known as a splashy acquirer, having largely steered clear of major deals in recent years. By face value, buying Otezla (apremilast) is Amgen's largest deal since it purchased Immunex nearly two decades ago.
Immunex gave Amgen Enbrel (etanercept), a drug approved for a range of inflammatory diseases and a large reason for the biotech's success. Over the past 17 years since that deal, Enbrel has earned Amgen more than $60 billion in sales. That commercial success could continue, too, thanks to a recent court decision that prevents a lower-cost competitor to Enbrel from entering the market.
But Enbrel is in the later stages of its life cycle as a product, making planning for an Enbrel-less future a top priority for Amgen. Acquiring Otezla helps the company do that, although the deal came about as a direct result of Bristol-Myers buying Celgene for $74 billion.
"This opportunity was created for us by industry consolidation," said Amgen CEO Robert Bradway on a Monday conference call. "We've been patient in deploying our capital and I think this deal rewards that patience."
The Federal Trade Commission, which reviews biopharmaceutical M&A, had raised antitrust concerns over Bristol-Myers owning Otezla, as well as an experimental drug the pharma was testing in head-to-head studies against Otezla. Both are oral medicines, a noteworthy feature in a market dominated by injectable biologics like Enbrel or AbbVie's Humira (adalimumab).
Amgen owning Otezla would appear to raise similar issues, although neither Bristol-Myers nor Amgen mentioned any potential regulatory hurdles in statements about the transaction.
"From a policy standpoint, it is hard to understand how Amgen's commercialization of Otezla is any less anti-competitive than Bristol's, since the FTC is trading the anti-competitive effects of one combined portfolio ... for another combined portfolio," wrote SVB Leerink analyst Geoffrey Porges in an August 26 note.
To Porges' point, Amgen also has an approved biosimilar copy of Humira, although it won't be available in the U.S. until 2023 per a settlement deal with AbbVie.
Otezla's sale, however, is contingent on Celgene and Bristol-Myers entering into a consent decree with the FTC and the closing of that deal.
"[The FTC] will review it, I'm sure, on the merits but you should assume that we feel very confident," said Bradway.
Last year the drug earned $1.6 billion in sales, and Amgen expects that number to increase by low double-digits over the next five years. If achieved, such growth would make Otezla a roughly $3 billion-a-year drug for Amgen.
Between 800 and 900 Celgene employees currently working on Otezla will join Amgen as a result of the deal, a company spokesperson confirmed to BioPharma Dive.
Amgen noted Enbrel is most frequently prescribed for rheumatoid arthritis, while Otezla is most often used in patients with psoriasis for whom topical therapies aren't sufficient. It's protected in the U.S. by patents running through 2028, though Porges noted that timeline might be optimistic.
More of a debate will likely center on the price Amgen paid to get Otezla, which at $13.4 billion is higher than most analysts predicted.
Amgen said it will fund the purchase with balance-sheet cash, which as of the end of the second quarter stood at nearly $22 billion. Accounting for expected future cash tax benefits, Amgen put the net value of the deal at $11.2 billion.
Shares in Amgen rose by a little more than 1% in early Monday morning trading.