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Amgen Pays $13.4 Billion for Otezla

Amgen Inc. paid a whopping $13.4 billion in cash for Celgene Corp.’s Otezla, its star psoriasis drug. In conjunction with the deal, Celgene was acquired by Bristol-Myers Squibb Co. for $74 billion. Thousand Oaks-based Amgen announced the agreement in August and it finalized on Nov. 22. The drug, which is approved in more than 50 markets worldwide, is the only oral, non-biologic treatment for psoriasis and psoriatic arthritis, Amgen said. Otezla was approved in 2014 and has since become Celgene’s third-biggest drug – sales climbed from $500 million in 2015 to a projected $1.9 billion for this year, according to a Reuters report. Through Otezla, Amgen looks to expand its global reach and bolster its portfolio, Chief Executive Robert Bradway told analysts during a third-quarter earnings call. Amgen’s October purchase of a 20.5 stake in Chinese biotech, Beigene for $2.7 billion in cash goes hand-in-hand with the Otzla acquisition to extend the company’s global reach. Beigene took responsibility for Celgene’s immuno-oncology products in 2017, acquiring Celgene’s commercial operations in China and its commercial portfolio, including cancer drugs Abraxane, Revlimid and Vidaza. Anti-trust concerns Amgen’s agreement to buy Otezla satisfied concerns from the Federal Trade Commission that a Celgene and Bristol-Myers combination “would substantially lessen competition and tend to create a monopoly,” the agency said in a Nov. 15 statement. The FTC refers to Bristol-Myers’ oral psoriasis drug in its pipeline, considered to be “the most advanced oral treatment for moderate-to-severe psoriasis.” It’s surprising that the FTC wouldn’t find fault with Amgen purchase of the drug, given its biosimilar version of AbbVie’s Humira, Amjevita, an anti-inflammatory psoriasis drug, and Embrel, which treats arthritis and psoriasis. Both drugs are administered via injection. Amgen adjusted its overall guidance once the deal was finalized, expecting total revenues in the range of $23.1 to $23.3 billion; these figures were previously expected to be within $22.8 and $23 billion, the company said in a statement. Still, some analysts believe Amgen paid too much for the drug – nearly $2 billion too much – while others feel the price is suitable for such a blockbuster drug, according to a report from FiercePharma. The report factors in a 6.5 percent discount price and margins, $2.2 billion in tax breaks on Amgen’s promised sales, and the net value of Otezla, as of Aug. 28, at $11.8 billion, toward its estimate that Amgen overpaid by $2 billion. Sales force factor Analysts will count on Amgen’s formidable sales force, the report continued, which brought in $5 billion a year for Embrel, to make the purchase worthwhile for investors. Minimal risk and key patents that don’t expire until 2028 for Otezla also help sales, the Wall Street Journal reported. “As the prevalence of chronic inflammatory diseases increases worldwide, Otezla represents a unique opportunity to further Amgen’s mission of bringing innovative medicines to patients, while building on our long-standing expertise in inflammation,” Bradway said in a statement. “We look forward to working with the dedicated professionals joining us from Celgene to help realize the global potential of Otezla as an important option for patients.”

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