FTC Settles Suit, Potentially Averting Further Hurdles
Source: McAlinden Research
September 7, 2023 (Investorideas.com Newswire) McAlinden Research shares a deep dive into a market driver with alpha-generating potential.
Last week, the U.S. Federal Trade Commission (FTC) suspended its legal challenge to Amgen Inc. (AMGN:NASDAQ)'s proposed acquisition of Horizon Therapeutics Plc (HZNP:NASDAQ), 2022's largest deal announcement in the biopharma space. The FTC and Amgen-Horizon then agreed to settle on Friday, clearing the way for the $27.8 billion purchase to close sometime in the fourth quarter.
The FTC notes that, as part of the settlement, attorneys general from six states - California, Illinois, Minnesota, New York, Washington, and Wisconsin - will also dismiss a related federal court preliminary injunction action.
There was significant doubt cast upon the FTC's case not long after the commission originally filed its suit in May, given its employment of a novel theory that Amgen could eventually bundle its drugs with those it is acquiring from Horizon in negotiations with insurers - therefore entrenching Horizon products' premiere placement in the market and choking out potential competitors that might be cheaper or more effective. Horizon currently sells two marketed products, Tepezza (teprotumumab) for thyroid eye disease and Krystexxa (pegloticase), a chronic refractory gout treatment.
Since Amgen was quick to agree that they would not bundle their products with Horizon's, a settlement was the natural conclusion. Further conditions of the agreement between the FTC and the two firms stipulate Amgen will not introduce discount or rebate schemes on their own products that would influence the sale or positioning of Horizon's drugs.
The FTC, which has become more aggressive toward mega-mergers across multiple industries, presented the Amgen-Horizon settlement as a win, but it seems more likely that an ongoing wave of M&A activity among pharmaceutical and biotechnology firms will be bolstered by the sudden conclusion of the suit.
GlobalData's Deals Database, cited by Pharmaceutical Technology, notes that there were 479 pharma M&A deals announced in Q2 2023, increasing by 18% QoQ in Q2 and 151% YoY. The total value of these deals was $51 billion, decreasing by -30% in Q2, compared with the previous quarter's total of $72.5 billion. Still, Q2's pharma industry M&A deal value rose by 77% YoY.
Though fewer deals were signed in the first quarter than in the second, the size of Q1's deal value was boosted by Pfizer Inc.'s announcement that they would be acquiring massive biotech firm Seagen Inc. in biopharma's largest deal in almost four years' time. Pfizer's offer of $229 per share in cash, a 33% premium on Seagen's share price at the close preceding the deal becoming public, pushed the total value of the deal to $43 billion.
As MRP has previously noted, Pfizer executives have been among a consortium of biopharma heads that have voiced their desire to increase dealmaking with outside companies. Pfizer has set a goal of adding $25 billion in revenue by 2030 from business development moves, including acquisitions. Those could help the company offset an estimated drop of roughly $17 billion in sales from upcoming patent expirations. Bloomberg notes that Pfizer thinks that sales of Seagen's four FDA-approved oncology products will exceed $10 billion, about $2 billion more than analysts' estimates.
The smooth closure of the Pfizer-Seagen tie-up is still beholden to regulators at the FTC, but the recent news on the Amgen-Horizon deal is likely to invigorate confidence among investors that this deal will ultimately receive approval as well.
As of July, the FTC requested more information from Pfizer and Seagan in their review of the deal. Fierce Pharma writes that second requests from the FTC occur in roughly 25% of M&A deals, citing MEDACorp data. The regulator challenges such a transaction 5% - 10% of the time.
Charts
More Info:
Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. Contact management and IR of each company directly regarding specific questions.
More disclaimer info: https://www.investorideas.com/About/Disclaimer.asp Learn more about publishing your news release and our other news services on the Investorideas.com newswire https://www.investorideas.com/News-Upload/
Global investors must adhere to regulations of each country. Please read Investorideas.com privacy policy: https://www.investorideas.com/About/Private_Policy.asp
