February 3, 2023
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Amgen buys Horizon Therapeutics for $27B in cash

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Amgen’s new research and development facility in San Francisco. (courtesy photo)

Thousand Oaks-based Amgen today announced its largest acquisition in company history, $27 billion for Horizon Therapeutics, positioning itself with a pipeline of treatments that could pay dividends over the coming decades.

Amgen, one of the largest biotechnology companies in the world, beat out competition from Sanofi and Johnson and Johnson, both of whom bowed out of the race earlier this month.

The purchase, which could close in the first half of 2023, pending U.S. and E.U. approvals, will be made entirely in cash, Amgen said.

It will pay $116.50 per share for Horizon’s stock, a premium of nearly 20% above Horizon’s closing price on Dec. 9.

It’s also nearly a 50% premium to the company’s closing price of $78.76 on Nov. 29, the last closing price before Horizon announced it was entering into discussions of being bought out.

“We have admired Horizon’s success for some time and we’ve studied their business closely through time as well. When presented with this opportunity we are prepared to move quickly,” Amgen CEO Bob Bradway said during a call with investors Dec. 12.

Amgen focuses heavily on making drugs that treat rare, autoimmune and severe inflammatory diseases. 

Similarly, Horizon has invested heavily on coming up with treatments for rare diseases.

“Amgen has the scale expertise and resources to advance the company’s pipeline molecules with speed and to support global registration and commercialization,” Dave Reese, Amgen’s vice president of research and development, said during the call.

“Given the company’s focus on biologics, Amgen also has the complementary process development expertise to assist the company in delivering lifecycle management programs focused on new formulations and new router administration.”

Amgen shares took a slight hit, closing at $276.78 Dec. 12, down less than 1%.

Amgen’s acquisition of Horizon brings with it “compelling revenue growth, efficiency opportunities and pipeline potential,” SVB Securities analyst David Risinger said in a note.

Amgen is no stranger to mergers and acquisitions, with this purchase the company’s seventh since 2019 — but it is by far the priciest. Previous acquisitions were for an average of less than  $5 billon each.

Before Dec. 12, Amgen’s largest acquisition was when it paid $13.4 billion for Otezla, a psoriasis treatment that has paid dividends so far.

In its most recent quarter, Otezla sales were $627 million, Amgen’s third-best selling treatment. And sales are still increasing year-over-year.

Given the price, “the size and target will undoubtedly generate debate (and intrigue) given such a move may buck past conservative deal trends,” RBC Capital Markets analyst Gregorgy Renza said in a note.

But, with continued biosimilar competition cutting into Amgen’s treatments — like so many other biotechnology companies — a deal like this could be what vitalize its pipeline for the future.

When finalized, Amgen will be welcoming a slew of treatments, including Tepezza.

Horizon’s lead treatment, Tepezza is used to treat thyroid eye disease, an affliction characterized by progressive inflammation and damage to tissues around the eyes.

Last year, revenue from the product more than doubled, driving Horizon’s overall net sales 47% higher, to $3.2 billion. Sales of Tepezza this year are expected to exceed $500 million, Horizon said in a press release.

Other drugs mentioned by Amgen during the call were Krystexxa, a treatment for chronic refractory gout, and and Uplizna, a treatment for a rare and serious autoimmune condition called neuromyelitis optica spectrum disorder.

Combined, those three treatments netted Horizon a combined $2 billion in sales in the first nine months of this year.

“And each of these are still early in their lifecycle,” Bradway said.

The combined company will generate significant cash flow, enabling Amgen to continue to invest in both internally developed and externally sourced innovation, while also maintaining and growing dividends, Bradway added.

To close the deal, Amgen said it has secured $28.5 billion in financing from lenders, led by Bank of America and Citibank. For Amgen, the lead financial advisor for the acquisition is PJT Partners. Its financial advisor is Citigroup. Its legal advisors are Sullivan & Cromwell LLP and William Fry LLP, according to the company.

Morgan Stanley and J.P. Morgan acted as the financial advisors for Horizon, while the company’s legal advisors were Cooley LLP and Matheson LLP.