Amgen Inc. said it was buying the global rights to psoriasis medicine Otezla for $13.4 billion in cash from Celgene Corp.
Summit, N.J.-based Celgene, which is in the process of being acquired by Bristol-Myers Squibb Co. for $95 billion, will sell the drug to ease out antitrust concerns related to the deal. The U.S. Federal Trade Commission had ordered Bristol-Myers in June to off-load Otezla, or apremilast, over antitrust concerns. The deal, already approved by European regulators, is expected to close by the end of the year.
The drug, which generated $1.6 billion in revenues, is expected to have at least low double-digit sales growth, on average, over the next five years, according to Amgen.
Bristol-Myers' shares were up by 5.20% to $49 apiece in premarket trading on Nasdaq on Aug. 26, while Celgene's stock was up by 3.83% to $97.59. Amgen's stock was down by 1.80% to $195.50 per share in premarket trading on Nasdaq.
Bristol-Myers said it plans to use the proceeds from the sale of the drug for debt reduction. It also announced that it would increase the size of its previously announced share purchase program by $2 billion to $7 billion. The share buyback will be executed following the closing of its merger with Celgene, subject to the company's board approval.
Morgan Stanley & Co. LLC is serving as financial adviser and Kirkland & Ellis LLP is serving as legal counsel to Bristol-Myers regarding the divestiture. Arnold & Porter Kaye Scholer LLP is also acting as legal counsel on antitrust matters.
