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Amgen snaps up Celgene’s Otezla for $13.4bn

Higher-than-expected price helps BMS sweeten merger deal

Amgen

Bristol-Myers Squibb (BMS) and Celgene look to be on track to complete their long-awaited merger after yesterday confirming the sale of Celgene’s psoriasis blockbuster Otzela to Amgen for a hefty $13.4bn.

Celgene needed to sell off Otezla after the US anti-trust authority the FTC concluded in June that having the oral medicine in the same portfolio as BMS’ pipeline tyrosine kinase 2 (TYK2) inhibitor would give too big a share of the market.

Analysts say the move is good news for both sides, though many comment that Amgen have paid significantly more than expected for the drug. Its likely selling price had been estimated at around $10bn, suggesting that a bidding war helped drive up the price.

Otezla is the leader in the market segment for treating psoriasis in patients who have progressed from topical treatments, and who want to try an oral treatment before having to progress to a biologic, such as Humira.

The product reached sales of $1.6bn last year, growing 26% compared to the previous 12 months, and has continued this trajectory this year.

Analysts agree with Amgen that the drug slots nicely into its existing psoriasis and anti-inflammatory portfolio. This includes Enbrel (boosted earlier this month by a successful defence of its US patent) and Amgevita, its Humira biosimilar, which is approved and already available in Europe and approved ahead of a likely US launch in 2023.

Otezla is currently approved for three indications in the US - moderate-to-severe plaque psoriasis (in patients eligible for phototherapy or systemic therapy), adults with active psoriatic arthritis; and the recently approved use in adults with oral ulcers associated with Behçet's Disease.

Amgen is confident that the portfolio fit, plus scope for further licence extensions, makes Otezla a good buy.

Amgen

Amgen CEO Robert Bradway

Robert Bradway, chairman and chief executive officer at Amgen commented:

"We will take advantage of our 20 years of experience in inflammatory disease to realise the full global potential of Otezla as an affordable option for patients with these serious, chronic inflammatory conditions."

The drug has patent exclusivity through at least 2028 in the US, and Amgen says it believes Otezla can achieve an average of least low double-digit sales growth over the next five years.

Analysts at William Blair agreed that Amgen can make a success of Otezla, and noted that phase 3 trials II in scalp psoriasis produced positive results, with ongoing trials in genital psoriasis and paediatric plaque psoriasis providing further growth opportunities.

Last week Amgen was rumoured to be preparing to acquire rare disease biotech Alexion. Most market commentators dismissed this as speculation, however, despite the logic of such a move being backed by many investors.

BMS and Celgene now anticipate their merger closing by the end of 2019, on the earlier side of the most recently updated guidance of end of 2019 or early 2020.

BMS says that it will use the Otezla cash to pay off its debts faster, and to increase a planned post-merger share re-purchase from $5bn to $7bn.

Article by
Andrew McConaghie

27th August 2019

From: Marketing

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