What happened
Investors are often encouraged when one of their companies bulks up by acquiring a peer. But that sentiment can turn sour if the takeover target stumbles.
This was the impetus behind Amgen's (AMGN -1.33%) nearly 3% decline on the stock market Wednesday. After divulging its latest quarterly results, the peer it plans to walk to the altar with wasn't looking very pretty.
So what
That potential Amgen asset is pharmaceutical company Horizon Therapeutics (HZNP), which published its first-quarter figures before market open.
These showed that Horizon booked slightly over $832 million in net sales, 6% below the result in the same quarter of 2022. Non-GAAP (adjusted) net income fell at a notably steeper rate, declining to a shade over $194 million -- or $0.83 per share -- from the year-ago quarter's almost $316 million.
Both headline numbers badly missed analyst projections. On average, these were for nearly $915 million on the top line and $1.20 for per-share adjusted net income.
This is uncomfortable for Amgen and its shareholders as the company announced last December that it would acquire Horizon. Not only that, but the suitor had said it would pay a premium of nearly 50% over Horizon's stock price at the time; since then, Horizon's shares have largely held their value.
Now what
So Amgen is on the hook for an asset that doesn't look so beautiful these days. That said, Amgen and Horizon would fit decently together, not least because of the latter's lineup of approved drugs (such as gout treatment Krystexxa, sales of which grew 33% in the first quarter). Amgen's management has also stated that Horizon's pipeline programs are very compatible with Amgen's.
