WASHINGTON, Might 16 (Reuters) – The U.S. Federal Commerce Fee stated on Tuesday it has filed a lawsuit to cease Amgen Inc’s (AMGN.O) $27.8 billion acquisition of Horizon Therapeutics Plc (HZNP.O) in a uncommon transfer to dam a big pharmaceutical deal.
The FTC stated it opposed the deal due to concern that Amgen would leverage its large promoting medicine to stress insurance coverage corporations and pharmacy profit managers to provide favorable phrases for Horizon’s two key merchandise – the fast-growing thyroid eye illness remedy Tepezza and gout drug Krystexxa.
The FTC determination to cease this acquisition marks a change. Beforehand, the company flagged therapeutic overlaps within the corporations and waved the offers by way of after requiring one of many medicines to be divested.
The case was assigned to Choose John Kness, who was nominated to the court docket by President Donald Trump. It was filed in federal court docket in Chicago.
Amgen stated in an announcement it was dissatisfied by the FTC determination and that it believed it had “overwhelmingly demonstrated” that the deal had no reputable aggressive points. The California-based biotech, which had hoped to shut the deal within the first half of this yr, stated it could work with the court docket to finish the transaction by mid-December.
The swimsuit drove Horizon’s inventory value down 14% to shut at $96.34, whereas Amgen shares fell 2.4% to $227.88. It additionally pushed down shares of biotech corporations Seagen Inc (SGEN.O) and Prometheus Biosciences (RXDX.O), which lately struck offers to be purchased by main drugmakers Pfizer Inc (PFE.N) and Merck & Co (MRK.N), respectively.
“The FTC has signaled its willpower to scrutinize pharma mergers extra rigorously,” former FTC Chairman William Kovacic stated in an electronic mail. He stated the fee’s determination to attempt to block the deal, moderately than pursue a settlement, suggests the FTC doesn’t consider earlier settlements adequately mounted the perceived aggressive points.
Amgen introduced plans to purchase Horizon in December, saying that its uncommon illness medicine would supply it some safety from the drug pricing provisions of the Inflation Discount Act, that are geared toward medicine most generally utilized by the federal government’s Medicare well being plan.
One month later, Democratic Senator Elizabeth Warren wrote to FTC Chair Lina Khan asking her to scrutinize the deal for antitrust violations and to oppose it if the company discovered them.
Within the letter, Warren stated Tepezza prices almost $433,000 per course and identified each corporations’ histories of elevating costs on their medicine.
Amgen sees income from the Horizon medicines serving to to offset elevated competitors that has eroded gross sales of its blockbuster rheumatoid arthritis drug Enbrel. Different key medicine in Amgen’s product portfolio, corresponding to psoriasis remedy Otezla, face the lack of patent protections over the following few years.
The FTC, which presently has three Democratic commissioners, voted 3-0 to approve the problem to the Amgen-Horizon deal.
BMO Capital Markets analyst Evan Seigerman stated he believes the FTC’s arguments are “overly broad and at greatest hypothetical,” and expects the deal to finally shut. Nonetheless, he stated Pfizer’s $43 billion takeover of Seagen may face an analogous problem.
Jefferies analyst Michael Yee stated drugmakers might change how they view M&A targets primarily based on this FTC case to emphasise smaller corporations or these with merchandise nonetheless in scientific trials.
Shares of some corporations considered as potential acquisition targets like Sarepta Therapeutics (SRPT.O) and BioMarin Pharmaceutical (BMRN.O) closed down greater than 5% and three%, respectively.
The final main pharmaceutical deal accredited by the FTC was AstraZeneca’s (AZN.L) $39 billion acquisition of Alexion Pharma in April 2021, about two months earlier than Khan was appointed by the Biden administration.
Reporting by Diane Bartz; modifying by Tim Ahmann
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