How Has The Acquisition News Moved AMGN Shares Since The Announcement?

Key Takeaways

• Amgen is buying Horizon Therapeutics for just over $26 billion, or $116.50 per share.
• Horizon has two major drugs, Tepezza and Krystexxa, a thyroid eye disease treatment and chronic gout treatment – both are infusions.
• The deal helps Amgen smooth out revenue as two of its drugs are nearing the end of their patents.

Pharmaceutical mergers are nothing new. Large pharmaceutical companies often seek out smaller drug companies with successful products to add to their pipeline given the cost and timelines associated with researching and developing treatments in-house.

Add to this mix the length of time it takes for a drug to go through clinical trials and come to market, and it is no surprise that some companies buy others to fill in their pipeline. Amgen did this when it announced that it was buying Horizon Therapeutics.

Here is what the deal means for both companies.

Amgen buying Horizon Therapeutics

Amgen announced its acquisition of Horizon Therapeutics on December 12, 2022. The company is paying over $26 billion, or $116.60 per share, for Horizon. The per-share buyout price is considerably higher than Horizon’s closing price of $78.76 before the announcement.

Amgen won a bidding war for the company against rivals Sanofi and Johnson & Johnson. The deal represents the largest biopharma deal of 2022 and provides Amgen with another division that develops medications for treating rare diseases.

Who is Amgen?

Amgen is one of the world’s leading biotechnology companies. The company had revenue of $6.7 billion for the third quarter of 2022 and is estimated to earn up to $26.3 billion for the year.

It currently has over 20 products on the market, with Enbrel, Prolia, and Otezla making up a large portion of sales. With a few drugs coming to the end of their patents, Amgen is seeking a way to smooth out revenues while it waits for more trial data and FDA approval of other drugs.

In mid-2022, Amgen closed its deal to buy ChemoCentryx, which focuses on developing autoimmune disorder drugs.

Who is Horizon Therapeutics?

Horizon Therapeutics PLC is a biopharmaceutical company legally headquartered in Dublin, Ireland, and operationally headquartered in Lake Forest, Illinois. Its primary market is the U.S.

The drugmaker researches and develops medications for rare diseases, including thyroid eye disease and gout. Its thyroid eye disease medication, Tepezza, garnered over $1 billion in sales during its first year on the market. This drug is only available in the U.S.

Other drugs manufactured by Horizon Therapeutics and their 2021 annual income include:

• Krystexxa: $565.5 million
• Ravicti: $291.9 million
• Procysbi: $189.9 million
• Actimmune: $117.2 million
• Uplizna: $60.8 million
• Buphenyl: $7.9 million
• Quinsair: $1 million
• Pennsaid: $191.6 million
• Rayos: $56.9 million
• Duexis: $74 million
• Vimodo: $8.4 million

Why Amgen is buying Horizon Therapeutics?

Adding Horizon Therapeutics to its portfolio helps Amgen build on its plan to enter into treating rare diseases through medication. It also allows the company to get ahead of the expiration of its profitable drug patents.

Amgen’s key drugs are Otezla, a psoriasis therapy, and the arthritis drug Enbrel. Both have been strong performers for Amgen but will lose their protected status in a few years.

Buying Horizon Therapeutics allows Amgen to maintain and improve its profitability. Sales of Enbrel dropped 14% during the first quarter of 2022, although sales have rebounded through the second and third quarters.

Another reason for the deal is that the FDA has given Tepezza orphan drug status, which provides the manufacturer with the rights to exclusive marketing and financial incentives to develop rare disease treatments further.

Finally, Horizon has over 20 drugs in its pipeline, all at various stages of research. Add this to the handful in Amgen’s pipeline, and there is the potential for significant income streams in the coming years.

Amgen stock performance since the announcement

Amgen stock closed at $281.99 on November 29, 2022, when news broke after hours that Horizon was in talks with Amgen, Janssen, and Sanofi. It then rallied to close at $286.40 during the first trading day after the news. AMGN closed yesterday at $264.75 – still up 16.74% year to date.

When the deal was officially announced, Amgen stock dropped slightly. This is typical when a company agrees to buy another as investors fear the acquiring company overpaid for it or will issue new debt to complete the purchase.

Horizon Therapeutics stock performance since the announcement

Horizon Therapeutics stock jumped up on the news that the company is in talks to be bought out. The stock closed at $78.76 and opened the next day at $102.65, a 30% gain.

When the deal was announced with Amgen, Horizon’s stock jumped again, closing at $97.29 the night before and opening at $111.55 the next day.

Bottom Line

With this deal, the future of Amgen is better than before. While the company has some significant drugs coming off their patents, it has many others in its pipeline to compensate for the revenue loss. However, it will take time for their approval.

In the meantime, Amgen can fill the gap with Tepezza. From there, any drugs in Horizon’s pipeline could make this deal even sweeter for Amgen if they also become blockbuster treatments.

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