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Highly Promising Psoriasis Drug To Be Purchased By Amgen For $13.4 Billion


Highly Promising Psoriasis Drug To Be Purchased By Amgen For $13.4 Billion
Otezla, which is a psoriasis drug made by pharma company Celgene that is believed to have high potential will be bought by Amgen in a deal worth $13.4 billion. This deal is part of the forced divestment of Celgene according to directions of antitrust authorities in its efforts to merge with Bristol-Myers Squibb in a deal that is worth $74 billion.
According to the National Psoriasis Foundation, a flagship new treatment aimed targeted to tackle a health condition which impacts about 8 million Americans annually would be acquired by Amgen according to the announcement for the deal. This deal is also suited for both Celgene and Bristol-Myers because it would help both the companies to comply with the directions of the antitrust authorities to complete the much anticipated merger and place a former appeal with the authorities.
A competing psoriasis medication is already being developed by Bristol-Myers and the company had announced in June about its plans for selling off Celgene's Otezla drug as a part of its efforts to smoothen the antitrust path for the merger.
In 2018, the total revenue generated from the psoriasis treatment was $1.61 billion and according to a report by Bloomberg, the drug is estimated to generate annual revenues of $2.71 billion by 2023.
After future cash tax benefits are accounted for, the acquisition will be about $11.2 billion, noted Amgen.
There were reports floating in the media about Otezla as a possible divestiture product.
The final antitrust approval of the merger is however required for the Otezla sale. Both the companies - Bristol-Myers and Celgene, had said earlier that their proposed merger would be closed by the end of 2019 or at the beginning of 2020.
This merger would also be among the largest deals in the pharma industry in about a decade. The value of the deal for the Otezla drug by Celgene was more than what was expected by analysts even though typically, any divestment which is done as a part of the antitrust regulations in the case of mergers of two rivals tend to fetch lower prices because companies seek to quickly divest the assets to get the green signal for a merger or acquisition. According to predictions by analysts in the months of July and August, the acquisition was estimated to be valued between $8 billion and $10 billion.
There was jump of as much as 5.7 per cent and 3.2 per cent in the shares of Bristol-Myers and Celgene respectively. The news however pulled down the shares of Amgen by as much as 2.1 per cent.
According to data from Bloomberg, the stocks of Amgen up about 2.3 per cent year-to-date at $199.08 per share on Friday.