Amgen Announces Acquisition Of Otezla, A Leading Immunology Drug

Amgen has announced on August 26 that it is going to purchase Otezla which is a leading immunology drug. It will be purchasing the drug from Celgene for $13.4 billion worth of cash consideration. The valuation of the deal is at a net consideration of close to $11.2 billion an amount that excludes $2.2 billion which was the present value of the future tax benefits that are anticipated. The deal is expected by Amgen to close the deal by the year end.

The share price of Amgen was 2.85 % higher than the previous day and reached $204.75 after the announcement. This shows that in spite of the high price of purchase the investors are overall optimistic.

Amgen is already enjoying a good position in the sector of immunology with Enbrel which is its biologic drug. The company further launched a biosimilar equivalent of AbbVie’s Humira called Amgevita in a few markets in Europe. Investors are expecting that in order to further advance the revenues of Otezla, Amgen will be leveraging its strength in the immunology sector.

However, some investors have begun questioning the possibility of the Amgen-Alexion deal as Amgen has tied up a significant amount of resources in order to acquire Otezla and now there are lesser chances of another acquisition taking place by the company.

After the deal, the share price of Alexion Pharmaceuticals has dropped to $112.12 which is 2.78% loss.

Otezla’s acquisition is expected to enhance the revenues as well as earning per share of Amgen immediately after the completion of the deal. Otezla’s revenue is expected to be reported at $ 1.9 billion in the year 2019. Amgen has estimated that there is going to be double-digit sales growth for Otezla until 2024 therefore Otezla will be accelerating its revenue growth.

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