BMS and Celgene Merger Moves Forward with $13.4 Billion Sale of Otezla

Pile of money

The merger between Bristol-Myers Squibb and Celgene may have a smoother road now that the companies have sold off the blockbuster psoriasis and psoriatic arthritis drug Otezla to California-based Amgen for $13.4 billion.

BMS and Celgene first announced the probable sale of the asset earlier this summer as a means to smooth out the anti-trust review process of the merger from the Federal Trade Commission. BMS announced its plans to acquire Celgene earlier this year for $74 billion. In its announcement of the sale of Otezla this morning, Giovanni Carforio, chairman and chief executive officer of BMS, called the deal with Amgen and important step toward completing the pending merger with Celgene. With the sale of Otezla, BMS said the merger with Celgene is expected to be completed by the end of this year. BMS said it will use the capital from the deal will be used to pay down debt.

In addition to psoriasis and psoriatic arthritis, Otezla, an oral, selective inhibitor of phosphodiesterase 4 (PDE4), has also been approved for the treatment of adult patients with oral ulcers associated with Behçet’s. The approval from the U.S. Food and Drug Administration in July marked the first one for that particular indication.

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This morning, Amgen said the acquisition of Otezla is a strategic fit for the company and “fits squarely” within its current portfolio in psoriasis and inflammation. Robert A. Bradway, chairman and CEO of Amgen, said Otezla will complement its current branded drugs, Enbrel and Amgevita. Otezla is the leading treatment in the post-topical, pre-biologic segment in its approved indications, the company said in its announcement.

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

Otezla generated $1.6 billion in annual revenue in 2018 and Amgen said bringing the drug under its umbrella will benefit its near-and long-term revenue growth. Amgen believes there is a significant opportunity to grow Otezla through global expansion and new indications, with expectations for Otezla to realize at least low double-digit sales growth, on average, over the next five years. Otezla has been approved in 54 countries, including major markets such as France, Germany and Japan. Amgen said it is well-positioned to continue driving Otezla international sales growth.

“Otezla represents an exciting opportunity to strengthen Amgen's presence in inflammation and continue Amgen's geographic expansion,” Bradway said.

Under terms of the deal, Amgen paid BMS $11.2 billion in cash, with another estimated $2.2 billion in “anticipated cash tax benefits.” The money provides Amgen the drug and all intellectual property rights associated, including any patents that primarily cover apremilast (Otezla), as well as other assets and liabilities related to Otezla. Also, Amgen will gain Celgene’s Otezla team with the deal. Bradway said the company is excited about the opportunities Otezla will bring to Amgen and looks forward to welcoming the Celgene employees into the fold.

“Together with the Otezla team, Amgen has the capabilities and infrastructure to continue to support this important medicine and ensure a seamless transition for patients and healthcare providers,” Carforio said.

In the announcement, Amgen noted that the deal to acquire the blockbuster drug hinges on the FTC’s approval of the merger of BMS and Celgene. Shares of Amgen are down less than 2% in premarket trading, while shares of BMS are up more than 5% to $46.58.

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