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Amgen to buy Immunex

December 17, 2001 Posted: 2035 GMT

NEW YORK (CNN/Money) -- Amgen Inc. entered an agreement Monday to purchase Immunex Corp. for $16 billion in cash and stock, giving the world's largest biotech developer access to one of the fastest growing arthritis medications.

Under terms of the transaction, each Immunex share will be exchanged for 0.44 Amgen share, representing 85 percent of the acquisition, and $4.50 in cash, or about 15 percent of the purchase.

That's about $30 for each Immunex share.

Shares of Immunex (IMNX: up $3.50 to $29.12, Research, Estimates) were up more than 8 percent in early trade Monday while Amgen (AMGN: up $3.41 to $59.44, Research, Estimates) shares were also higher after dipping $4.16 Friday.

Amgen will also acquire the 41 percent of Immunex owned by American Home Products (AHP: up $0.20 to $59.05, Research, Estimates), for the same purchase price per share. American Home Products, which has already agreed to vote in favor of the transaction, will own about 8 percent of the combined company.

American Home Products and Immunex co-promote the popular rheumatoid arthritis drug Enbrel, Immunex's key product, in the United States and Canada and AHP has the exclusive international rights to the product. AHP's statement said its proceeds from that drug will remain unchanged by Monday's agreement.

"Independently (Amgen and Immunex are) both great, lots of cash, product on the market and it's a wakeup call because you have a big biotech merging with a big biotech," David Saks, who manages the Saks MedScience fund, told CNNfn.

But some analysts said they thought Amgen may be paying too much.

"I don't think they needed to do this. I can guarantee that size at a high price doesn't pay off to shareholders," said Doug Christopher, an analyst at Crowell, Weedon & Co.

Another analyst, Roth Capital Partners' Fariba Ghodsian, said the merger would provide few synergies and was based on Enbrel: "They are paying $16 billion for one drug. Enbrel is a great drug, but I question whether it is worth that."

The success and potential of Enbrel was a key motivator for Amgen to buy Immunex, the company's statement said Monday.


"This is a compelling strategic transaction and an excellent opportunity for the shareholders, employees and partners of both companies, and we expect it will generate significant benefits for hundreds of thousands of patients around the world," said Amgen's chairman and chief executive, Kevin Sharer. "We firmly believe that, as a result of this combination, Enbrel -- the fastest growing biologic drug ever -- will reach its peak of $3 billion or more in annual sales."

The results for Enbrel, Immunex's rheumatoid arthritis treatment, have not been all positive however.

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In March, Immunex said it would halt testing of Enbrel in chronic heart failure patients because the drug did not prove effective in clinical trials. The company had theorized Enbrel's anti-inflammatory mechanism would help heart patients.

Immunex also said at the time that two mid-stage trials of its experimental asthma drug Nuvance showed no apparent benefit in opening up lung airways. Immunex's stock plunged on the double dose of bad news.

Despite its past test results, analysts believe Amgen will benefit from the transaction. For Amgen, it would help offset heavy reliance on anti-anemia drug Epogen and immunity-booster Neupogen, both billion-dollar sellers.


And Immunex has few major drugs in development to augment Enbrel, said Peter Crowley, head of health-care investment banking at CIBC, who is not involved in the deal.

The biotech sector has seen a rash of acquisitions this month, with the acquirers buying mature companies with drugs that are either already on the market or will be soon.

"I think big pharma will look at this deal and say 'our pipelines are not as rich as they could be, maybe we'll step and pay some big dollars,'" Saks said.

He said the acquisition will stimulate deal activity across the biotech sector, with smaller and medium-size firms seeing the most action. (550K WAV or 550K AIFF)

-- from staff and wire reports


• Sources: Amgen in talks to buy Immunex
Dec. 14, 2001
• Immunex up on takeover talk
Dec. 13, 2001
• Biotech buyout binge
Dec. 7, 2001

• Amgen
• Immunex

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