What happened
Shares of ChemoCentryx (CCXI) skyrocketed by as much as 110% in premarket trading Thursday morning. The company's stock bolted higher following the news that biotech heavyweight Amgen (AMGN -0.59%) offered $3.7 billion in cash to acquire the rare-disease specialist.
The deal represents a whopping 116% premium relative to where ChemoCentryx's shares closed on Wednesday. The two companies said that the transaction is expected to close in the fourth quarter of 2022. Prior to today's buyout announcement, ChemoCentryx's stock was down by a hefty 33% for the year.
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So what
By acquiring ChemoCentryx, Amgen will add the newly approved ANCA-associated vasculitis drug Tavneos, as well as three additional pipeline candidates, to its vast portfolio. ANCA-associated vasculitis is a relatively rare autoimmune disorder characterized by swelling and damage to small blood vessels.
After a prolonged regulatory review, the Food and Drug Administration approved Tavenos for this indication late last year. The drug reportedly generated sales of $5.4 million in Q1 of this year. At its peak, Wall Street thinks the drug will haul in approximately $700 million in annual sales. So if this revenue forecast pans out, Amgen will have gotten a downright bargain by acquiring ChemoCentryx at this price.
Now what
Amgen is the latest blue chip to go bargain shopping in the middle of this raging bear market for healthcare companies. Earlier this year, Epizyme, 1Life Healthcare, and a handful of other struggling healthcare businesses were also snapped up by larger entities at a substantial discount relative to their intrinsic value. With capital markets under pressure and interest rates on the rise, this emerging trend is likely to continue for the foreseeable future.
