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Amgen (AMGN) Offers to Acquire Drug Discovery Platform

Zacks Equity Research

Amgen Inc. AMGN announced that it has offered to acquire Denmark-based drug discovery platform biotech company, Nuevolution, at $3.36 per share (32.5 Swedisk Krona) in cash. Amgen’s offer represents a premium of 169% over the closing price of Nuevolution shares on May 21, valuing it at approximately $167 million (1610 Swedisk Krona). The shares of Nuevolution are listed on the Nasdaq Stockholm Small Cap exchange.

The board of Nuevolution unanimously recommended an acceptance of the offer and three top shareholders, representing 59% shareholdings, have also undertaken to accept the offer. Per the press release, Amgen will provide the offer document on Jun 12. The acceptance period for the offer will commence from Jun 13 and is expected to end on Jul 4. Amgen expects to settle the offer by Jul 15. Amgen will offer cash and restricted stock compensation arrangements to retain the full-time employees of Nuevolution.

 Amgen’s shares have declined 12% so far this year against the industry’s rise of 2.2%.

 

Nuevolution is a leading drug discovery biotech company with its proprietary discovery platform and programs to discover novel small molecule drug candidates. The company partners with other pharmaceutical companies, granting access to its platform. 

Please note that Amgen has collaborated with Nuevolution since October 2016 for discovering drugs targeting multiple indications including two cancer programs. The acquisition will bring the Nuevolution’s drug-discovery platform in-house which may boost Amgen's ability to discover novel small molecules against difficult-to-drug targets and make the process faster and more efficient.

We remind investors that while Amgen’s newer drugs — Prolia, Xgeva, Blincyto, Kyprolis — will drive sales in the future quarters asits mature products are facing competition. Sales of one of the key drugs, Neulasta are declining following rise in biosimilar competition from several companies including Mylan MYL and Coherus BioSciences CHRS. Meanwhile, sales of Amgen’s new migraine drug, Aimvoig, remained soft in the first quarter of 2019 which faces stiff competition from Lilly’s LLY Emgality and Teva’s Ajovy,

The company’s potential acquisition of Nuevolution will help Amgen accelerate discovery of drugs targeting various indications with better chances of success. This may lead to newer products, which can offset loss in sales from mature drugs.

Apart from Nuevolution acquisition, Amgen is rapidly advancing its pipeline and the approval of osteoporosis drug Evenity late last month was a boost. Amgen boasts a strong biosimilars pipeline, which could be an important long-term growth driver for the company. It expects to launch additional biosimilars in 2019.

Amgen Inc. Price

 

Amgen Inc. Price

Amgen Inc. price | Amgen Inc. Quote

Zacks Rank

Amgen currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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