Amgen agreed to buy ChemoCentryx for $3.7 billion on Thursday, leading CCXI stock to rocket.
ChemoCentryx is focused on rare and orphan diseases, particularly those in the autoimmune, inflammatory and cancer areas. It recently gained Food and Drug Administration approval for Tavneos, a treatment for inflammation in the blood vessels.
And the biggest biotech company wants ChemoCentryx under its umbrella.
"The acquisition of ChemoCentryx represents a compelling opportunity for Amgen to add to our decadeslong leadership in inflammation and nephrology with Tavneos, a transformative, first-in-class treatment for (anti-neutrophil cytoplasmic autoantibody)-associated vasculitis," Amgen Chief Executive Robert Bradway said in a written statement.
On today's stock market, CCXI stock soared 109.2% to close at 50.43, just below the buyout price of $52 per share. Amgen stock edged down slightly to 246.98.
CCXI Stock: A Huge Premium
In addition to Tavneos, Amgen gets access to three early-stage drugs. The company is also testing Tavneos in patients with a rare kidney disease and a condition that causes small, painful lumps to form under the skin. Amgen paid a 116% premium on CCXI stock's closing price Wednesday.
The acquisition helps Amgen fill a hole as its biggest medicines begin facing generic competition, SVB Securities analyst David Risinger said in a report to clients. Several key products will face generic rivals beginning in 2025-30 as their patents expire. Risinger doesn't believe Amgen's existing portfolio is enough to stanch the losses.
"With Tavneos' U.S. exclusivity through 2036 (if granted patent extension) and the drug's potential to expand to multiple complement-mediated indications, we believe this transaction is a meaningful step toward filling that gap," he said.
Risinger forecasts more than $2 billion in 2030 sales of Tavneos. The deal is expected to close in the fourth quarter.
Amgen Is A 'Logical Partner'
Fellow SVB Securities analyst Joseph Schwartz says the deal is a fair value for CCXI stock investors. As of Wednesday's close, shares were down 34% year to date. The SPDR S&P Biotech exchange-traded fund was down 25%.
Schwartz says he has long considered ChemoCentryx a takeover target, noting AstraZeneca set a precedent when it acquired Alexion Pharmaceuticals. Alexion was working on a similar suite of rare-disease treatments.
"We view Amgen as a logical partner to take the torch from ChemoCentryx and continue the launch of Tavneos in Anca-associated vasculitis, as well as execute on the earlier-stage opportunities," he said. "ChemoCentryx should benefit from the deep expertise that Amgen has in the inflammation and nephrology space."
He kept his outperform rating on CCXI stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
