Amgen Inc.’s $27.8 billion deal to buy Horizon Therapeutics Plc, the largest in the biotechnology company’s history, will be challenged by federal regulators who argue the tie-up would hamper innovation and slow the pace of drug development, according to a person familiar with the matter.
(Bloomberg) — Amgen Inc.’s $27.8 billion deal to buy Horizon Therapeutics Plc, the largest in the biotechnology company’s history, will be challenged by federal regulators who argue the tie-up would hamper innovation and slow the pace of drug development, according to a person familiar with the matter.
The Federal Trade Commission is expected to file a lawsuit to block the deal on Tuesday, the person said, asking not to be identified discussing private information. Horizon shares fell 15% in after-hours trading. Amgen rose 0.6%.
While the agency’s scrutiny isn’t a surprise given that it asked for additional information earlier this year, the two companies don’t significantly overlap in their product areas, said Evan Seigerman, an analyst at BMO Capital Markets. The deal was expected to close in the next couple of weeks, and a lawsuit could mark a change in how the FTC views consolidation in the drug industry, he said.
“If this signals FTC’s view around the broader anticompetitive nature of pharmaceutical mergers, then we could see a potential challenge” to larger transactions, he wrote in a note to clients, specifically mentioning Pfizer Inc.’s planned $43 billion purchase of Seagen Inc. “We do not have any data suggesting a lawsuit is imminent, but could see a challenge if FTC applies closer scrutiny to larger biotech/pharma M&A.”
Amgen said it isn’t aware of any decision made by the FTC and would provide more information once it’s available. Horizon deferred to Amgen. The FTC declined to comment.
Horizon Therapeutics Drops on Report FTC May Block Amgen Deal
First Time
The suit would mark the first time in more than a decade that the FTC has sought to block a pharmaceutical deal outright. In the past, the agency allowed industry mergers to move forward so long as the companies divested any overlapping treatments, and a Bloomberg Law analysis found that the FTC imposed conditions on less than one-third of the 38 pharmaceutical deals valued at $10 billion or more between 2010 and 2021.
But that could be changing. US President Joe Biden’s FTC Chair Lina Khan has taken a tougher approach to deals, challenging several major mergers including Microsoft Corp.’s proposed acquisition of Activision Blizzard Inc. and Intercontinental Exchange Inc.’s deal to buy mortgage software rival Black Knight Inc. In 2021, the FTC announced that it would reexamine its approach to drug mergers.
“Relatively few leading drugs have been developed within the largest pharmaceutical companies,” Khan said at a workshop last year on pharma deals. “As antitrust enforcers, it’s our job to promote their competition that will help create the right conditions for the next generation of scientific advances.”
The Horizon acquisition marks Amgen’s largest ever merger, and the FTC’s first major opportunity to test out that altered approach. While the companies don’t currently have much overlap in terms of areas of expertise, they are both working on treatments for eczema and lupus.
Eczema is a chronic inflammatory skin condition that affects as many as 25 million people in the US. Amgen and Japan’s Kyowa Kirin Co. announced in 2021 that they were partnering to develop an antibody treatment, KHK4083, for severe eczema. Horizon has partnered with Q32 Bio on its own antibody treatment for eczema, ADX-914.
Lupus is a chronic autoimmune disease that attacks internal organs, affecting about 1.5 million people in the US, mostly women, according to the Lupus Foundation of America. Amgen has been working on developing a biologic drug, efavaleukin alfa, as a treatment for the most common type of lupus, while Horizon has focused on an antibody treatment, Daxdilimab.
Soros Fund Management LLC and Tudor Investment Corp. increased their Horizon holdings in in the first quarter, making it their largest position, according to a Bloomberg analysis of 13F reports. LMR Partners LLP and Laurion Capital Management LP also were buyers, while Paulson & Co. reduced its position. Perceptive Advisors LLC exited the stock.
Vanguard Group Inc. and BlackRock Inc. were the top holders of Horizon as of April 30, according to data compiled by Bloomberg.
The Capitol Forum reported earlier on the expected suit.
–With assistance from Ike Swetlitz and Abhishek Vishnoi.
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