Johnson & Johnson has dropped out of the running to acquire Horizon Therapeutics, leaving Amgen and Sanofi as the two remaining potential buyers of the Dublin-based drugmaker.
As required under Irish takeover law, Horizon last week confirmed it was in “highly preliminary” discussions to possibly sell itself to one of the three companies. Horizon made the disclosure after a Wall Street Journal report on the talks, and cautioned that it may not reach a deal or even receive a bid.
Horizon’s potential sale, likely the largest biotech acquisition of 2022 if it happens, is playing out publicly because of Ireland’s rules requiring acquisition disclosures. J&J cannot return as a potential suitor for six months, and Sanofi and Amgen must either declare whether they have “firm intent” by Jan. 10, after which they have 28 days to submit an offer.
A would-be buyer would get rights to a portfolio of medicines, including Tepezza for thyroid eye disease and Krystexxa for chronic gout, that brought in $925 million in sales in the third quarter. Horizon also has Uplizna, a drug for a rare autoimmune disease, that it acquired in a $3 billion deal for Viela Bio in 2021.
Last week in a note to clients, Jefferies analyst Akash Tewari pegged the chances of a deal at around 85%. Tewari believes the company's stock is currently valued at about a 15% discount to a takeout price expected to be worth $25 billion to $30 billion.
In a separate note on Monday, fellow Jefferies analyst Michael Yee evaluated Amgen’s interest in Horizon. Yee noted that Amgen has historically stayed away from large M&A deals, having spent, at most, $10 billion to $12 billion on single acquisitions. But Amgen will face biosimilar competition and may be emboldened by other large pharma companies, like AbbVie and Bristol Myers Squibb, that have seen their stock prices close in on all-time highs after large deals, Yee wrote.
Shares in Horizon fell by about 6%, to $98 apiece, in midday trading on Monday. The company is currently worth a little over $22 billion.