Updated 1:50 p.m.
The purchase of Immunex Corp. by Amgen Inc. will not impact the construction of a new $500 million manufacturing facility in West Greenwich, Amgen officials said today.
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Amgen agreed to buy rival Immunex Corp. for $16 billion in cash and stock to gain access to Enbrel, a rheumatoid arthritis medicine that Amgen predicts will have peak sales of $3 billion or more.
Seattle-based Immunex broke ground last month on a $500 million manufacturing facility in West Greenwich. The cell-culture manufacturing plant will produce the company’s blockbuster rheumatoid arthritis drug Enbrel, which reaped $1 billion in revenue in its first two years. The plant will employ 350 people.
“We intend to apply our significant resources and expertise in protein manufacturing to step up production and distribution of Enbrel to meet strong market demand. The first manufacturing facility in Rhode Island is completed, and we are committed to completing construction of the second plan to help meet that demand,” said Kevin Sharer, chairman and CEO of Amgen.
Amgen plans to increase production of Enbrel, which analysts forecast will have sales of $750 million this year, and sell the product along with its own entry in the market, Kineret. The transaction is the largest between two biotechnology companies.
Enbrel’s potential as a multibillion-dollar seller would give Amgen another blockbuster to go with its popular Epogen anemia treatment, expected to have $2 billion in sales this year. The proposed deal comes at a cost; Amgen expects the transaction to dilute 2003 profit before adding to earnings.
“Strategically, it’s a good fit,” said Libbe Englander, a hedge-fund manager at BioPharma Advisers, which holds Immunex shares. Still, “you’re making a lot of assumptions about Enbrel’s peak sales. You’re paying for the best-case scenario.”
Thousand Oaks, California-based Amgen agreed to pay 0.44 share of Amgen plus $4.50 in cash for each share of Immunex, the companies said in a statement. At Amgen’s closing price of $56.03 on Friday, the transaction values each share of Seattle- based Immunex at $29.15, 14 percent more than its closing price.
Biotechnology companies use their study of genetics, proteins and enzymes to help develop drugs. Traditional-medicine development is more dependent on chemical compounds.
Immunex has been rushing to complete a new plant in Rhode Island to help ease a supply shortage caused by faster-than- expected growth in demand for Enbrel, introduced in 1998. The company has forecast $900 million to $1.3 billion in sales next year.
“This acquisition will make Amgen a leader in the more than $10 billion potential inflammation market in biologics,” said Amgen Chairman and Chief Executive Officer Kevin Sharer in a statement. “This is a perfect strategic fit.”
American Home Products Corp., which owns 41 percent of Immunex, will vote in favor of the transaction and hold 8 percent of the new entity, the companies said. Existing investors in Amgen will hold about 81 percent of the new company.
American Home will also co-market Enbrel in the U.S. with Amgen, and retain all marketing rights to the drug outside the U.S., said Immunex spokeswoman Robin Shapiro.
People familiar with talks between the companies last week said Amgen might pay as much as $18 billion for its rival. Amgen shares dropped 6.4 percent on Thursday and 6.9 percent on Friday to close at $56.03. Immunex fell $1.34, or 5 percent, to $25.62 on Friday after climbing 10 percent on Thursday.
In trading before the opening of U.S. markets, Amgen shares traded as low as $53.11 and Immunex shares as high as $27.50. The companies expect to complete the transaction in the second half of next year, depending on shareholder and regulatory approval.
The transaction will dilute profit in 2003 and will probably add to earnings starting in 2004, Amgen said. The companies estimated merger-related savings at more than $200 million in 2003 and more than $250 million in 2004.
Immunex Chairman and Chief Executive Officer Ed Fritzky will join Amgen’s board, the companies said.
Bloomberg
