Amgen Buys Otezla

There was good news yesterday from our recommended portfolio holding, biotech pharma company Amgen. They announced that they will buy the psoriasis drug Otezla from Celgene for $13.4 billion in cash.

Celgene has to offload it because it is trying to merge with Bristol-Myers Squibb before the end of the year, which is developing a competing treatment. The US Federal Trade Commission required the sale as a condition to approving the merger.

Psoriasis is a fairly common skin condition that speeds up the life cycle of skin cells, which then form scales and itchy red patches. It is a chronic disease that doesn't ever really go away.

Otezla, which brought in sales of $1.61 billion last year, has patent protection in the US until 2028. Sales are expected to grow at least in the low-double digits over the next five years. Amgen's 2020 revenues are expected to be about $23.5 billion, so Otezla will increase their top line by about 8%. Amgen also expects sales growth outside of the US, notably in the EU and Japan.

Amgen has loads of cash, so this will not be their last deal. They are also actively buying back shares. Amgen stock was up 3% last night. Let the good times roll.