Amgen Hunts for New Revenue in $28 Billion Deal

To date, the companies have been making mostly small- and midsize deals, often for launched products, to avoid the challenges of digesting large rivals and limit the risks that an experimental drug doesn’t pan out.

Amgen’s cash deal for Horizon, announced Monday, is the largest in the biotech’s history. It comes months after Amgen had paid $3.7 billion for ChemoCentryx and its drug for rare immune-system diseases earlier this year. 

The acquisition would bring Horizon’s portfolio of rare-disease drugs that are projected to generate $3.6 billion in sales this year and $5.8 billion in 2027, according to analysts polled by FactSet.

Amgen said it would use its expertise manufacturing complex biological drugs and its global sales infrastructure to increase Horizon’s drug sales by treating more patients in the U.S. and expanding sales in international markets. 

“We’re acquiring this company with these molecules at an early stage in their life cycle,” said Amgen Chief Executive

Robert Bradway.

“Nice thing about that is our shareholders get to participate in the growth of those.” 

The revenues should help Amgen bridge a nearly $16 billion gap between the company’s projected 2030 sales and what its current product lineup can deliver, said Evan Seigerman, a BMO Capital Markets analyst.

Yet to do so, it has to load up its balance sheet with more debt, which was more than $37 billion at the end of the third quarter.

“They’re going to have to add more debt to their balance sheet, which already has a lot of debt,” Mr. Seigerman said. “That’s probably my biggest concern with interest rates rising and the impact of interest expense” on its profit and loss and statements. 

Amgen said on Monday that it expected to retire $10 billion in debt and bring its total debt load back to current levels by the end of 2025. 

Shares in the company fell 0.7% to close at $276.78 each on Monday.

Horizon, which was once known for buying older drugs and raising their prices and lowering its U.S. tax bill by moving its headquarters to Ireland, has reinvented itself in recent years as a rare-disease drug company, charging high prices to small patient populations.

Its bestselling drug is Tepezza, the first approved treatment for thyroid eye disease, a condition that causes bulging eyes and affects 70,000 to 100,000 people in the U.S. with moderate to severe forms of the disease, according to Amgen. This year, the drug is expected to reach nearly $2 billion in sales, and has a list price of about $433,000 per treatment course, according to Horizon.

Horizon’s gout treatment Krystexxa has an average sales price of about $327,000 per course of treatment, and analysts project it will have $706 million in sales this year, according to Medicare data. 

Amgen said it expects to negotiate lower prices overseas than what the drugs cost in the U.S. 

“These are still highly profitable products with very high unmet need in the market,” said

Murdo Gordon,

Amgen executive vice president of global commercial operations. “We’re optimistic that the reimbursement will be suitable, given the opportunity and the debilitating nature of these diseases.”

Amgen is betting those drugs can help replace lost revenue from franchises projected to lose patent protection and face generic competition in the coming years. The patent expirations will amount to a 5% annual reduction in sales from 2025 to 2030, according to J.P. Morgan.

Amgen’s osteoporosis drugs Prolia and Xgeva are expected to lose patent protection in 2025, and decline from $5.5 billion in sales this year to $3.5 billion in 2027, according to FactSet. Enbrel, an anti-inflammatory drug, is expected to lose patent protection toward the latter part of the decade and have sales decline by 43% from $4 billion this year to $2.3 billion in 2027.

Some of Amgen’s newer products, including lung-cancer treatment Lumakras and migraine drug Aimovig, haven’t lived up to expectations, said Brian Skorney, an analyst with

Robert W. Baird.

Amgen was under increased pressure to pull off a big deal after saying earlier this year that it expected compound annual sales growth of 5% through 2030, which some analysts have said may be too optimistic. 

“There was a lot of speculation that with the revenue guidance that they gave earlier this year, that it would be unrealistic to meet their long-term numbers without some big acquisitions,” Mr. Skorney said. 

Investors have sent up shares in recent months after Amgen reported promising but early study results for an experimental obesity treatment. If the drug proves to work safely, it could join a potentially $50 billion worldwide market.

Among the recent pharmaceutical-industry deals are Pfizer’s $5.4 billion deal for sickle-cell disease drugmaker Global Blood Therapeutics and Merck’s recent agreement to buy blood-cancer biotech

Imago BioSciences Inc.

for $1.35 billion.

Until its agreement with Horizon, Amgen’s largest deal had been its $16 billion takeover of Immunex Corp., maker of Enbrel, in 2001. 

Write to Joseph Walker at [email protected]

To date, the companies have been making mostly small- and midsize deals, often for launched products, to avoid the challenges of digesting large rivals and limit the risks that an experimental drug doesn’t pan out.

Amgen’s cash deal for Horizon, announced Monday, is the largest in the biotech’s history. It comes months after Amgen had paid $3.7 billion for ChemoCentryx and its drug for rare immune-system diseases earlier this year. 

The acquisition would bring Horizon’s portfolio of rare-disease drugs that are projected to generate $3.6 billion in sales this year and $5.8 billion in 2027, according to analysts polled by FactSet.

Amgen said it would use its expertise manufacturing complex biological drugs and its global sales infrastructure to increase Horizon’s drug sales by treating more patients in the U.S. and expanding sales in international markets. 

“We’re acquiring this company with these molecules at an early stage in their life cycle,” said Amgen Chief Executive

Robert Bradway.

“Nice thing about that is our shareholders get to participate in the growth of those.” 

The revenues should help Amgen bridge a nearly $16 billion gap between the company’s projected 2030 sales and what its current product lineup can deliver, said Evan Seigerman, a BMO Capital Markets analyst.

Yet to do so, it has to load up its balance sheet with more debt, which was more than $37 billion at the end of the third quarter.

“They’re going to have to add more debt to their balance sheet, which already has a lot of debt,” Mr. Seigerman said. “That’s probably my biggest concern with interest rates rising and the impact of interest expense” on its profit and loss and statements. 

Amgen said on Monday that it expected to retire $10 billion in debt and bring its total debt load back to current levels by the end of 2025. 

Shares in the company fell 0.7% to close at $276.78 each on Monday.

Horizon, which was once known for buying older drugs and raising their prices and lowering its U.S. tax bill by moving its headquarters to Ireland, has reinvented itself in recent years as a rare-disease drug company, charging high prices to small patient populations.

Its bestselling drug is Tepezza, the first approved treatment for thyroid eye disease, a condition that causes bulging eyes and affects 70,000 to 100,000 people in the U.S. with moderate to severe forms of the disease, according to Amgen. This year, the drug is expected to reach nearly $2 billion in sales, and has a list price of about $433,000 per treatment course, according to Horizon.

Horizon’s gout treatment Krystexxa has an average sales price of about $327,000 per course of treatment, and analysts project it will have $706 million in sales this year, according to Medicare data. 

Amgen said it expects to negotiate lower prices overseas than what the drugs cost in the U.S. 

“These are still highly profitable products with very high unmet need in the market,” said

Murdo Gordon,

Amgen executive vice president of global commercial operations. “We’re optimistic that the reimbursement will be suitable, given the opportunity and the debilitating nature of these diseases.”

Amgen is betting those drugs can help replace lost revenue from franchises projected to lose patent protection and face generic competition in the coming years. The patent expirations will amount to a 5% annual reduction in sales from 2025 to 2030, according to J.P. Morgan.

Amgen’s osteoporosis drugs Prolia and Xgeva are expected to lose patent protection in 2025, and decline from $5.5 billion in sales this year to $3.5 billion in 2027, according to FactSet. Enbrel, an anti-inflammatory drug, is expected to lose patent protection toward the latter part of the decade and have sales decline by 43% from $4 billion this year to $2.3 billion in 2027.

Some of Amgen’s newer products, including lung-cancer treatment Lumakras and migraine drug Aimovig, haven’t lived up to expectations, said Brian Skorney, an analyst with

Robert W. Baird.

Amgen was under increased pressure to pull off a big deal after saying earlier this year that it expected compound annual sales growth of 5% through 2030, which some analysts have said may be too optimistic. 

“There was a lot of speculation that with the revenue guidance that they gave earlier this year, that it would be unrealistic to meet their long-term numbers without some big acquisitions,” Mr. Skorney said. 

Investors have sent up shares in recent months after Amgen reported promising but early study results for an experimental obesity treatment. If the drug proves to work safely, it could join a potentially $50 billion worldwide market.

Among the recent pharmaceutical-industry deals are Pfizer’s $5.4 billion deal for sickle-cell disease drugmaker Global Blood Therapeutics and Merck’s recent agreement to buy blood-cancer biotech

Imago BioSciences Inc.

for $1.35 billion.

Until its agreement with Horizon, Amgen’s largest deal had been its $16 billion takeover of Immunex Corp., maker of Enbrel, in 2001. 

Write to Joseph Walker at [email protected]