Amgen said Monday that it will buy the psoriasis pill Otezla from Celgene (CELGZ), which is selling the medicine to remove an antitrust obstacle from its planned merger with Bristol-Myers Squibb.
The purchase price for Otezla is $13.4 billion — higher than many analysts expected.
Bristol-Celgene investors will surely be pleased about fetching such a high price for what was essentially a forced product divestiture. Amgen (AMGN) shareholders might be a bit more wary about paying so much for Otezla, even though the drug is a good strategic fit.
Otezla is approved to treat a handful of inflammatory diseases, including psoriasis and psoriatic arthritis. Sales last year totaled $1.6 billion, growing 26% year over year.
Last June, Celgene said it would sell Otezla to satisfy concerns raised by the Federal Trade Commission during its review of the proposed $74 billion merger.
“This agreement represents an important step toward completing our pending merger with Celgene,” said Bristol CEO Giovanni Caforio, in a statement. With the Otezla sale in place, the Bristol-Celgene merger is now expected to close by the end of 2019, the companies said.
For Amgen, purchasing Otezla makes good strategic sense because it pairs a highly profitable oral medicine alongside Enbrel, the company’s long-standing blockbuster injectable treatment. Amgen recently beat back a patent challenge on Enbrel, alleviating a concern about near-term biosimilar competition in the U.S.
In its own statement, Amgen said Otezla sales are forecast to grow in the “low double digits” on average for the next five years and to boost adjusted earnings immediately. The company said it will also realize $2.2 billon in tax benefits through the Otezla purchase, making the net sale price $11.2 billion.
“The acquisition of Otezla offers a unique opportunity for Amgen to provide patients an innovative oral therapy for psoriasis and psoriatic arthritis that fits squarely within our portfolio and complements our Enbrel and Amgevita brands,” said Amgen CEO Robert A. Bradway, in a statement.