- Wall Street analysts have crafted a short list of companies most likely to acquire Celgene's anti-inflammation drug Otezla, with top names including Gilead, Amgen and Johnson & Johnson.
- Gilead has its eyes on immunology and inflammation, underscored by a newly expanded deal with Belgian drugmaker Galapagos worth $5.1 billion. Picking up Otezla, according to Brian Abrahams of RBC Capital Markets, would "accelerate" the company's entry into the space.
- Salim Syed of Mizuho Securities sees Amgen as a more probable buyer given the biosimilar threats to its top-seller Enbrel, which carries the same psoriatic arthritis and psoriasis indications as Otezla. Syed and Bernstein's Ronny Gal have J&J in the mix too, as Otezla's oral administration could complement the pharma giant's portfolio of injectable psoriasis drugs.
Net sales on Otezla (apremilast) grew 26% last year to total more than $1.6 billion. While Bristol-Myers Squibb would surely like to bring such a blockbuster asset onboard through its planned acquisition of Celgene, the Federal Trade Commission has some antitrust concerns that are now spurring a sell off.
As a result, Wall Street is assessing where the drug will go and for how much.
The consensus among at least a few investment banks is that Otezla could fetch $5 billion to $10 billion depending on the buyer. If it's Gilead, RBC's Abrahams argues the price could reach as high as $9.6 billion, in good part because of cost overlaps.
Gilead and Galapagos are already working on another oral anti-inflammation drug called filgotinib, which they intend to submit for approval in rheumatoid arthritis later this year. If approved, Gilead would then have to build up a commercial team and develop a rapport with doctors.
Meanwhile, Otezla has been on the market for five years in related indications like psoriasis and psoriatic arthritis. As such, Abrahams wrote in a July 18 investor note that Otezla would be a smart purchase for Gilead, because it would likely spend as much as 65% of what would be needed to support Otezla marketing on the filgotinib rollout.
Gilead also holds around $30 billion worth of cash, cash equivalents and marketable securities, meaning it would still have plenty left over even after a Otezla buy at the higher price range. (That figure, updated at the end of March, doesn't reflect the effects of the recent deal with Galapagos.)
Yet Mizuho's Syed doesn't see Gilead as the most likely, due to its dealmaking history. In a July 17 note, he pointed out how it paid $12 billion for an entire company, the cell therapy developer Kite Pharma.
Syed wrote how Amgen makes more sense as an Otezla acquirer, due to its experience selling Enbrel (etanercept) and its need for new anti-inflammatory products in the event the drug's patents don't hold up. Amgen also has $26 billion worth of cash at its disposal.
Both Syed and Gal listed J&J as a potential suitor too. The pharma giant touts a $13 billion immunology business that includes Tremfya (guselkumab), Simponi (golimumab) and Stelara (ustekinumab), each an injectable treatment for psoriasis or psoriatic arthritis.
Amgen and J&J declined requests for comment. Gilead didn't return a request for comment before publication.