Amgen Inks $1.9B Deal To Buy Five Prime Therapeutics; Shares Pop 79%

Amgen has agreed to snap up clinical-stage biotech Five Prime Therapeutics for an equity value of $1.9 billion, to strengthen the company’s oncology candidates. Five Prime shares surged 78.7% to close at $38 on March 4, while Amgen shares declined almost 1% and closed at $221.91.

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Per the terms of the deal, the biotechnology company will pay $38 per share in cash. Amgen (AMGN) will acquire all of Five Prime shares through a tender offer. The tender offer will close subject to certain conditions. These include the conditions that at least a majority of the total number of Five Prime’s common shares are tendered and the expiration of the waiting period is determined as per the Hart-Scott-Rodino Antitrust Improvements Act.

Upon completion of the tender offer, a subsidiary of Amgen will merge with Five Prime (FPRX). The acquisition is likely to close in the second quarter of 2021.

Amgen CEO Robert A. Bradway said, “The acquisition of Five Prime offers a compelling opportunity for Amgen to strengthen our oncology portfolio with a promising late-stage, first-in-class global asset to treat gastric cancer.”

“We look forward to welcoming the Five Prime team to Amgen and working with them to leverage our best-in-class monoclonal antibody manufacturing capabilities to supply additional clinical materials, as well as expanded production quantities, to realize the full potential of bemarituzumab for even more patients around the world as quickly as possible,” he added. (See Amgen stock analysis on TipRanks)

Following the deal announcement, Oppenheimer analyst Jay Olson maintained a Buy rating and a price target of $266 (19.9% upside potential) on AMGN stock. The analyst views “deal synergies arising from AMGN’s leading oncology R&D platform, expanding international commercial footprint, and scalable manufacturing capabilities.”

Furthermore, Olson views “FPRX’s earlier-stage pipeline as potential upside to the deal value.”

Wall Street analysts are cautiously optimistic on the stock’s outlook. The Moderate Buy consensus rating breaks down into 10 Buy ratings versus 7 Hold ratings. The average analyst price target stands at $269.69 and implies upside potential of more than 21% to current levels over the next 12 months. Shares have gained about 4.6% over the past year.