Biotech Stock Roundup: HZNP Surges on AMGN Offer, TRDA Gains on VRTX Deal & More
The biotech sector was in the spotlight this week courtesy of acquisition news and strategic collaborations. Other pipeline updates were also in focus.
Recap of the Week’s Most Important Stories:
Horizon Gains on Amgen Acquisition News: Shares of Horizon Therapeutics, plc HZNP gained after biotech giant Amgen AMGN announced that it will acquire the former for $116.5 per share in cash or $27.8 billion. The news wasn’t exactly a surprise for Horizon. The acquisition represents a premium of approximately 47.9% to the closing price of $78.76 of Horizon on Nov 29, 2022 when the company confirmed that it is engaged in preliminary discussions with Amgen, Janssen Global Services, LLC and Sanofi for a potential acquisition offer. Subsequently, both Sanofi and Janssen dropped out of the race. The acquisition offer by Amgen also represents a premium of approximately 19.7% to Horizon’s closing price of $97.29 per share on Dec 9, 2022. The offer by Amgen implies an enterprise value of approximately $28.3 billion. Investors cheered the premium offered and shares gained on the same.
The acquisition will add a complementary portfolio of rare disease drugs like Tepezza, Krystexxa and Uplizna to Amgen’s broad and diversified portfolio and should be accretive to the bottom line by 2024. Amgen expects an estimated annual pre-tax cost reduction of at least $500 million by the end of the third fiscal year following completion. The transaction is expected to receive all necessary approvals in the first half of 2023.
Entrada Up On Vertex for Deal: Shares of Entrada Therapeutics, Inc. TRDA surged after the company announced a collaboration deal with biotech giant Vertex Pharmaceuticals, Inc. VRTX. The collaboration primarily focuses on Entrada’s program for DM1, ENTR-701, which is in late-stage preclinical development. Both companies have collaborated to discover and develop intracellular Endosomal Escape Vehicle therapeutics for myotonic dystrophy type 1 (DM1).
Per the terms, Vertex will pay Entrada $224 million upfront and make an equity investment of $26 million in the latter. Entrada is also eligible to receive up to $485 million for the successful achievement of certain research, development, regulatory and commercial milestones and tiered royalties on future net sales for any products that may result from this collaboration agreement. The agreement includes a four-year global research collaboration whereby Entrada will continue to advance and receive payments for certain research activities related to ENTR-701 as well as additional DM1-related research activities, while Vertex will be responsible for the global development, manufacturing and commercialization of ENTR-701 and any additional programs stemming from Entrada’s DM1 research efforts. The deal with Vertex resulted in an immediate cash influx of $250 million and investors were upbeat about the same.
Vertex also announced that the FDA cleared its investigational new drug application seeking approval to start clinical studies on VX-522, an investigational mRNA-based therapy for cystic fibrosis (CF) indication.
Gilead Collaborates with Arcellx, ImmunoGen: Gilead Sciences, Inc. GILD announced that its wholly owned subsidiary Kite has entered into a global strategic collaboration with a clinical-stage biotechnology company, Arcellx, Inc. to co-develop and co-commercialize the latter’s lead late-stage product candidate, CART-ddBCMA.
CART-ddBCMA is an investigational cell therapy product comprising autologous T cells that have been genetically modified to target multiple myeloma. The candidate is currently in phase II. Per the terms, Arcellx will receive an upfront cash payment of $225 million and a $100 million equity investment, as well as other potential contingent payments. Kite and Arcellx will share development, clinical trial, and commercialization costs for CART-ddBCMA and will jointly commercialize the product. The profits of the deal will be split equally.
The transaction is expected to close in the first quarter of 2023. Kite will commercialize the product and Arcellx will receive royalties on sales outside the United States. Kite will be responsible for the development and commercialization costs of any product under the collaboration that is not co-commercialized. Kite will be responsible for manufacturing post-completion of the technical transfer.
Gilead also announced a clinical collaboration with ImmunoGen. Both companies have collaborated to evaluate the safety and anti-leukemia activity of pivekimab sunirine (pivekimab) in combination with magrolimab, a potential, first-in-class, investigational CD47 inhibitor, in patients with relapsed or refractory (R/R) CD123-positive acute myeloid leukemia (AML). ImmunoGen’s pivekimab sunirine is a CD123-targeting ADC in clinical development for hematological malignancies. The collaboration will lead to a new cohort in ImmunoGen's 802 study and will evaluate pivekimab in combination with magrolimab in up to 42 patients with R/R CD123-positive AML. It is expected to be initiated in 2023.
Gilead currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance
Image Source: Zacks Investment Research
The Nasdaq Biotechnology Index has lost 2.31% in the past five trading sessions. Among the biotech giants, Moderna has gained 13.83% during the period. Over the past six months, shares of Moderna have soared 68.65%. (See the last biotech stock roundup here: Biotech Stock Roundup: CTMX Surges on REGN's Deal, APLS Up on Regulatory Update)
What's Next in Biotech?
Stay tuned for other updates.
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Amgen Inc. (AMGN) : Free Stock Analysis Report
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
Horizon Therapeutics Public Limited Company (HZNP) : Free Stock Analysis Report
Entrada Therapeutics, Inc. (TRDA) : Free Stock Analysis Report
