- Amgen will buy cancer drugmaker Five Prime Therapeutics for $1.9 billion in a rare public company acquisition by the large California biotech, which has been investing heavily to build up its oncology business.
- Five Prime's recent market rebound has been fueled by the success last fall of a mid-stage study testing the company's experimental stomach cancer treatment bemarituzumab. Results suggested adding the antibody drug to chemotherapy could improve response rates and extend survival in patients with a certain type of gastric cancer.
- Amgen's last significant public company acquisition was a nearly $10 billion buyout of Onyx Pharmaceuticals in 2013. That deal brought in the multiple myeloma treatment Kyprolis and followed two other early-decade acquisitions that gave Amgen the cancer drugs Imylgic and Blincyto.
With competition eating into the sales of franchise products like Neupogen, the first-generation biotech company Amgen has been hustling to reinvent itself with new products and acquisitions.
Thursday morning, the company (ticker: AMGN) added to its anticancer pipeline with a $1.9 billion deal to acquire Five Prime Therapeutics (FPRX), a small company that is testing a targeted treatment for stomach cancers. Investors in Amgen didn’t take much note.
Amgen stock slipped 1% in Thursday’s trading to close at $229.91, on a day when the Nasdaq Composite Index slid 2%. But Amgen’s $38 a share offer for Five Prime represented a substantial premium and Five Prime stock jumped 79% to end the day at $38.
Five Prime’s experimental drug bemarituzumab fits well with other stomach-cancer treatments that Amgen is developing, said Amgen financial chief Peter Griffiths, on a Thursday conference call. Stomach cancer is the No. 3 killer among cancers, and is particularly prevalent in Asia, where Amgen aims to increase its revenue. The acquisition should close in the June quarter.
A Thursday afternoon note by Raymond James analyst Dane Leone compared the Phase 2 trial performance of bemarituzumab against a recently reported Phase 3 trial of the Bristol Myers Squibb (BMY) product Opdivo in combination with chemotherapy as a first-line treatment for stomach cancer. The U.S. Food and Drug Administration is giving Opdivo a fast-track review after Bristol’s study showed that its drug lengthened survival by a couple of months, compared to chemotherapy alone.
The Phase 2 study of Five Prime’s drug with chemo stalled stomach cancer for a couple of months longer than chemo alone. Amgen expects to start a Phase 3 trial and says the drug could also prove effective against other solid tumors, such as lung cancer.
The Raymond James analyst expects the Bristol drug to become the standard treatment for stomach cancers driven by the cellular receptor that Opdivo targets— a worldwide population of 45,000 patients. Five Prime’s bemarituzumab could be used for patients whose cancers are driven by the different receptor targeted by that drug—a13,500 patient market, Leone estimates.
The analyst expects more deals by Amgen over the course of 2021. He rates the stock a Market Performer.
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