Amgen has agreed to purchase Horizon Therapeutics, which develops treatments for rare and immune diseases, for $27.8 billion—making it the largest health care acquisition this year.

Amgen to acquire Horizon Therapeutics in multibillion deal

Last month, Horizon disclosed that it was in preliminary talks with several pharmaceutical companies, including Amgen, Sanofi, and Johnson & Johnson's Janssen Global Services, about a potential sale. At the time, the Wall Street Journal reported that Horizon had a value of almost $18 billion and could sell for well over $20 billion.

On Monday, Amgen announced that it had agreed to purchase Horizon for $27.8 billion. Under the deal, which is the largest health care acquisition in 2022, Amgen will pay $116.50 for each Horizon share, which is 19.7% higher than the stock's Friday closing price and almost 50% higher than what Horizon said it originally believed the company would sell for.

According to STAT+, Horizon's best-known product is Tepezza, a treatment for moderate to severe thyroid eye disease. The condition, which is characterized by progressive inflammation and damage to tissues near the eyes, affects roughly 10,000 patients in the United States. Horizon initially purchased the drug in 2017 for $145 million, and FDA approved it for use in January 2020.

Since then, Tepezza has driven a large portion of Horizon's revenues. In 2021, Tepezza's revenue more than doubled, increasing Horizon's overall net sales by 47% to $3.23 billion. According to the investment data firm FactSet, the drug is expected to generate $1.97 billion in sales in 2022 and $2.26 billion in 2023.

"In nearly 15 years, we have built one of the fastest growing and most respected companies in the biotechnology industry from the ground up," said Tim Walbert, Horizon's CEO and chair. "We have accomplished a tremendous amount for patients, their families and our customers, and created significant value for shareholders."

In a statement, Amgen CEO and chair Robert Bradway said "[t]he acquisition of Horizon is a compelling opportunity for Amgen and one that is consistent with our strategy of delivering long-term growth by providing innovative medicines that address the needs of patients who suffer from serious diseases." He also noted that the acquisition is expected to be accretive in 2024.

What the Horizon deal could mean for Amgen

In recent years, pharmaceutical companies have had a growing interest in acquiring treatments for rare diseases, especially since these drugs can help companies grow their revenue after their primary products lose patent protections. According to the Journal, patents on Amgen's osteoporosis treatments Prolia and Xgeva, which brought in nearly $5.3 billion in revenue last year, will begin expiring within the decade.

According to STAT+, Amgen's acquisition of Horizon marks the company's first major entrance into the field of rare disease treatments. Through the deal, Amgen will be able to add more rare immune-disease drugs to its roster, which currently includes Enbrel and Otezla immune disease therapies.

Analysts at the investment firm Jefferies said the deal could contribute roughly $4 billion in new revenue for Amgen by 2024. Although analysts believe the acquisition could be accretive for Amgen's bottom line, the amount will likely depend on how much the company could reduce costs.

Analysts also noted that Amgen's acquisition of Horizon was "odd" since the company has mostly steered clear of large acquisitions in the past. Aside from the Horizon deal, Amgen's largest acquisition to date was its 2019 purchase of Celegene's psoriasis medication for $13.4 billion. It also purchased FivePrime Therapeutics for $1.9 billion in 2021 and Chemocentryx for $3.7 billion this October. (Herper/Mast, STAT+ [subscription required], 12/12; Dummett et al., Wall Street Journal, 12/12)