Celgene reached an agreement to sell global rights of its psoriasis treatment Otezla to Amgen for $13.4 billion, the companies announced. The deal helps clear the way for Bristol-Myers Squibb to proceed with its $74 billion deal for Celgene by the end of the year.
Analysts had expected Otezla to sell for around $8 billion to $10 billion when Celgene announced it was planning to divest the drug last June.
In a statement, Amgen said it would realize $2.2 billion in tax benefits from the acquisition, lowering the net sale price to $11.2 billion. It said it expected Otezla sales to grow in the “low double digits” on average for the next five years and that the deal would increase its adjusted earnings immediately.
Sales of Otezla were $1.6 billion in 2018, and drew significant interest from multiple potential buyers from early on in the process.
“This is an attractive product for them that fits more or less with their current portfolio,” Jeff Jonas, a healthcare portfolio manager at Gabelli funds, said. “It’s an approved product with a good safety profile, so there’s not a lot of risk.”
Most of the proceeds from the sale would go to pay down debt from the Celgene acquisition, Bristol-Myers said. Bristol-Myers also said it was increasing the size of an accelerated share buyback from $5 billion to $7 billion. The buyback was previously planned.
The deal is contingent on a consent decree between Bristol-Myers Squibb and the FTC and the closing of the merger with Celgene. It is expected to close by the end of 2019.
Otezla is approved in more than 50 markets outside the United States, including the European Union and Japan. It has patent exclusivity in the United States at least until 2028. Amgen has its own, injectable psoriasis treatment, Enbrel, for which it recently fought off a patent challenge.
Dyal and Goldman Sachs served as financial advisors.