In the ever-changing world of biotech, major acquisitions are a frequent phenomenon. However, one news outlet went on to report that one of the largest biotech stocks in the market is getting close to finalizing a major deal. Amgen (NYSE: AMGN) is supposedly near a deal to buy Alexion Pharmaceuticals (NASDAQ: ALXN) at a whopping 74 percent premium.
The news only started to break on Friday but had originally been published late Wednesday according to a Spanish news outlet which reported that Amgen is “in the final stretch to buy Alexion for $200 per share,” according to securities analyst Salim Syed in a report issued in the outlet.
While Amgen declined to comment on what was referred to as “market rumors,” most analysts on Wall Street went on to say that they wouldn’t be surprised to see such a deal come to fruition. “Such a deal could make a ton of sense,” added Piper Jaffrey analysts in a note to clients. Alexion would boost Amgen’s earnings starting in 2020 and lead to as much as a 20 percent increase in earnings.
Nor is this rumor particularly surprising to analysts. Alexion has long been considered as a likely acquisition target by analysts, but Amgen specifically happens to be an excellent fit as a buyer. Alexion currently producers a $3 billion per year drug called Soliris that treats rare blood and neurological disease as well as a next-generation drug Ultomiris. That would be a major boost to Amgen, which has been struggling to deal with competition developing bio-similar drugs against some of their top products. While Amgen has recently fended off a copycat competitor in a patent battle against its blockbuster inflammation drug Enbrel, protecting nearly $5 billion in 2019 sales in the process. However, it’s questionable how long Amgen will be able to keep this up successfully before a competitor manages to break through onto the market with a drug different enough that it wouldn’t fall under patent protection. In this sense, adding Alexion’s products to the mix would help diversify Amgen’s product line.
Shares of Amgen didn’t move much in response to the news, dipping around 2 percent over the course of the day. The past six months have seen the stock move up and down between the $170 and $205 price range, but overall Amgen has seen it’s share prices stay relatively the same, having gained back a fair bit of its market cap it had lost back in June and July. Nor did shares of Alexion Pharmaceuticals respond positively to this little piece of news, with shares declining by 6.6 percent over the course of Friday. However, most analysts look at the possibility of a deal as a great sign and are optimistic going forward.
Amgen Company Profile
Amgen is a leader in biotechnology-based human therapeutics, with historical expertise in renal disease and cancer supportive-care products. Flagship drugs include red blood cell boosters Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and Enbrel for inflammatory diseases. Amgen introduced its first cancer therapeutic, Vectibix, in 2006 and received approval for bone-strengthening drug Prolia/Xgeva in 2010. Amgen’s acquisition of Onyx bolstered the firm’s therapeutic oncology portfolio with Nexavar and Kyprolis. Recent launches include Repatha (cholesterol-lowering) and Aimovig (migraine). – Warrior Trading News
