There have been several noteworthy developments in the drug space recently, which will likely have a material impact on the companies in this sector and the markets they serve. Companies mentioned in this review include Amgen Inc. (AMGN), Onyx Pharmaceuticals (ONXX), AstraZeneca (AZN), Mylan Inc. (MYL), and Astex Pharmaceuticals (ASTX).
Amgen to Acquire Onyx
After several months of negotiations, Onyx Pharmaceuticals has agreed to be acquired by Amgen Inc. in a deal valued at $10.4 billion. Under the terms of the agreement, Amgen will pay $125 a share in cash for all the outstanding shares of Onyx and in exchange will gain access to a rapidly expanding cancer-drug market. Onyx possesses an attractive portfolio of oncology assets highlighted by its growing Kyprolis franchise, approved last year for a rare blood cancer. Kyprolis is clearly the main prize for Amgen as analysts estimate the drug could generate more than $3 billion in revenue by 2021. At a time when the oncology market is growing increasingly important to an aging U.S. population, we view the transaction favorably for Amgen as it helps fill several holes in its existing cancer business. The deal has been unanimously approved by both boards and is expected to close at the beginning of the fourth quarter, subject to the satisfaction of customary closing conditions, including the receipt of regulatory clearance.
AstraZeneca to Acquire Amplimmune
Sticking with the theme of consolidation, AstraZeneca announced in late August that it had entered into a definitive agreement to acquire privately-held Amplimmune in a deal that could be valued at up to $500 million. Under the terms of the agreement, AstraZeneca will make an upfront payment of $225 million and Amplimmune will also be eligible to receive milestone payments of up to $275 million. In return, AstraZeneca will be strengthening its oncology pipeline as Amplimmune possesses several cancer-related drug candidates currently engaged in late-stage clinical trials. The move comes as part of a broader effort by AstraZeneca to improve its late-stage pipeline. Over the past few months it has entered into a number of acquisition deals including bids for Pearl Therapeutics and Omthera Pharmaceuticals. The purchase of Amplimmune is expected to close sometime in the third quarter of 2013.
India Approves Mylan Acquisition
On September 3rd, India’s government approved U.S.-based drug company Mylan’s $760 million acquisition of the vaccine and injectable drug unit of India’s Strides Arcolab. The deal that was originally announced in February had been delayed for several months over concerns from India’s government that it could limit the supply of critical medicines in the country. The transaction would give Mylan a nice boost in capacity for the production of low-cost injectable drugs such as antibiotics and chemotherapy medicines.
Ostuka to Buy Astex
On September 5th, Japan-based Ostuka Holdings agreed to acquire U.S. cancer-drugmaker Astex Pharmaceuticals in an all-cash deal valued at roughly $886 million. Ostuka, which is Japan’s fourth-largest drugmaker in terms of sales, has been seeking to strengthen its product pipeline ahead of the patent loss of its blockbuster drug Abilify. By acquiring Astex, Ostuka would significantly enhance its capabilities in oncology by gaining access to a healthy pipeline of leukemia and other cancer-related drugs currently in development. The transaction is expected to close early in the fourth quarter of 2013.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.