November 9, 2015
By Mark Terry, BioSpace.com Breaking News Staff
Thousand Oaks, Calif.-based Amgen may be ready to enter the life sciences merger and acquisition frenzy with a big acquisition, inside sources told The Financial Times today.
For the most part, Amgen has avoided large acquisitions, instead buying or licensing drugs in early stages of development.The company indicated it has 11 experimental drugs in early-stage clinical trials, five of which are being tested in mid-stage trials and seven in late-stage trials. In August, the company announced a strategic collaboration deal with Monrovia, Calif.-based Xencor to develop and commercialize cancer drugs and inflammatory drugs.
The Financial Times cites an unnamed inside source that claims Amgen is evaluating acquisition targets whose worth is in the $10 billion range and that have drugs that are close to market.
The last major acquisition by Amgen was Onyx Pharmaceuticals, Inc. in 2013, for about $10 billion. In the deal, Amgen acquired the rights to cancer drug Kyprolis. Initially, due to modest sales, investors weren’t thrilled by the Onyx acquisition, but in 2014 the U.S. Food and Drug Administration (FDA) approved Kyprolis for use in a cocktail of treatments for relapsed multiple myeloma. In September of this year, the FDA also accepted Amgen’s supplemental New Drug Application (sNDA) for Kyprolis in patients with relapsed multiple myeloma.
“They’re taking a lot of comfort from the Onyx acquisition,” The Financial Times source said.
As well they should, since Kyprolis sales increased 46 percent year-over-year. Other sales increases include Enbrel sales rising 30 percent, Neulasta increasing 6 percent, Xgeva improving 19 percent, Sensipar/Mimpara increasing 29 percent, and Prolia increasing 25 percent.
Amgen recently released its third-quarter financial statements. Total revenue increased by 14 percent in the third quarter compared to the same quarter in 2014, hitting $5.723 billion for the quarter. The adjusted earnings per share (EPS) rose 18 percent this quarter compared to last year’s third quarter. Adjusted operating income rose 19 percent to $2.686 billion.
“We delivered record revenues, adjusted earnings and cash flow in the third quarter, while improving our operating margins and investing in six exciting new product launches,” said Robert Bradway, chairman and chief executive officer of Amgen in a statement. “With several innovative medicines still in development, we are well on the way to achieving our long-term objectives for shareholders and patients alike.”
Recently analysts noted that Amgen was actively working to revitalize its oncology pipeline, while pushing into the cardiac medicine market. Some of this is due to its older blockbuster drugs, Neulasta, Neupogen and Epotin Alfa facing patent expirations. It’s also facing competition from biosimilars and generics. An example is Novartis AG ADR’s Sandoz, Inc. launched a biosimilar to Neupogen called Zarxio.
In the cardiac market, Amgen recently acquired Naarden, Netherlands-based Dezima Pharma B.V., a privately-held company focused on treatments for dyslipidemia. This deal was for $300 million in cash upfront and up to $1.5 billion or more in royalties. It also acquired the rights to TA-8995, a drug to treat high cholesterol.
“With the recent launches of Repatha (evolocumab) and Corlanor (ivabradine), and today’s acquisition of Dezima, Amgen is proud to be on the leading edge of an exciting new wave of treatments for cardiovascular disease, an illness impacting millions of people worldwide,” Bradway said in a statement at the time.
The Financial Times did not speculate on potential acquisition targets, although analysts are likely to be doing so in the coming days. The unnamed source did, however, suggest that the company would probably finance an acquisition by raising debt. The company currently holds about $30 billion in debt and the same amount in cash, but apparently much of the cash is “trapped offshore,” according to The Financial Times, and “repatriating cash to the U.S. to fund a deal would incur a hefty tax bill.”
