Amgen on Monday said it has agreed to acquire Ireland-based drugmaker Horizon Therapeutics, outlasting rival suitors Sanofi and Johnson & Johnson in takeover negotiations that were first disclosed last month.
The deal values Horizon at $27.8 billion on a fully diluted basis. In dollar terms, it’s the largest in Amgen’s four-decade history, eclipsing a 2002 acquisition of Immunex that gave the California biotechnology company rights to Enbrel, its top-selling drug and for years one of the most lucrative pharmaceutical products.
While buying Horizon is not likely to give Amgen its next Enbrel, it does hand the company a portfolio of rare and immune disease drugs that are projected to bring in sales of $3.6 billion this year.
Enbrel will lose market exclusivity at the end of this decade and Amgen, like other pharmas facing looming patent cliffs, has turned to dealmaking to hunt for new products. In August, it spent $4 billion to acquire ChemoCentryx and its inflammatory disease drug Tavneos.
Per terms of the acquisition, Amgen will pay $116.50 per Horizon share, a roughly 20% premium to their closing price Friday and 48% higher than what they were worth before Horizon disclosed it was in deal talks. J&J dropped out of negotiations on Dec. 5 and on Sunday Sanofi said it had as well.
Disclosures from Horizon as part of the deal's announcement reveal that Amgen and J&J entered talks only after Sanofi had made three acquisition proposals. Horizon's board determined Sanofi's initial offers to be insufficient and approached Amgen, J&J and one other, unnamed company.
J&J and the other company never made formal bids, according to the disclosures, while Amgen and Sanofi submitted and revised competing offers. In a meeting Saturday, Horizon's board judged Amgen's bid to be superior to Sanofi's and accepted it.
Both Amgen’s and Horizon’s boards of directors have agreed to the acquisition, which the companies expect will close in the first half of 2023. As Horizon is based in Ireland, the Irish High Court must approve the deal, as must the companies' shareholders and antitrust regulators in the U.S., Germany and Austria.
Amgen will fund the deal with cash it has on hand and new debt.
“The acquisition of Horizon is a compelling opportunity for Amgen and one that is consistent with our strategy of delivering long-term growth by providing innovative medicines that address the needs of patients who suffer from serious diseases,” said Amgen CEO and chairman Robert Bradway, in a statement.
Horizon’s top-selling drugs are a medicine for thyroid eye disease called Tepezza and a chronic gout treatment called Krystexxa. In November, the company increased its peak sales forecasts for both drugs, citing their market opportunity in Europe and rising demand.
Horizon sells nine other therapies in the U.S., including one it acquired in 2021 that treats the rare autoimmune disease neuromyelitis optica spectrum disorder.
In a Nov. 30 note to clients, Jefferies analyst Akash Tewari wrote that Horizon was looking more attractive to pharma buyers as its main products could be exempt from government price negotiations under the recently passed Inflation Reduction Act.
Tewari and other analysts noted there’s still uncertainty around how easily Horizon can grow sales of Tepezza, though. The company’s raised forecasts are a “show me story,” Tewari wrote.
Still, Horizon gives Amgen an immediate revenue boost, helping bolster its business as biosimilar copycats erode sales of former top-seller Neulasta and loom in the future for Enbrel. Salim Syed, an analyst at Mizuho Securities, estimated in a Sunday evening note that roughly $10 billion, or about 40%, of Amgen’s 2022 revenue could be lost by 2030 due to competition.
The company expects the deal to be accretive to earnings beginning in 2024. There is likely to be "some operational and administrative restructuring" of Horizon following the acquisition, but no decisions have been made regarding the number of employees who would be affected, Amgen said.
Amgen is counting on growth from its new cancer drug Lumakras as well as asthma medicine Tezspire, and has recently drawn investor attention for a promising weight-loss treatment that’s in early testing.
Editor’s note: This story has been updated with additional details on deal negotiations and regulatory clearances.