Celgene's $7.2 billion bid to acquire Receptos is slated to close on Aug. 24 and if it goes off without a hitch, Celgene will add yet another potential blockbuster drug to its ever-expanding product pipeline.
Since delivering arguably best in class results during phase 2 trials, Receptos has been eagerly seeking a partner to help cover late-stage trials for its promising MS therapy ozanimod. In Celgene, Receptos finds a proven Goliath with deep enough pockets to not only get ozanimod across the clinical finish line but to ensure its best shot at commercial success too.
From Celgene's point of view, acquiring Receptos nets it an important product that can help it achieve its goal of diversifying away from cancer treatment. Last year, Celgene rolled out its first noncancer therapy, Otezla, a drug for psoriasis, and earlier this summer Celgene reported positive results from a midstage study evaluating its Crohn's disease drug GED-0301, too.
The excitement surrounding Receptos ozanimod isn't likely misplaced.
In phase 2, ozanimod reduced MS-related brain lesions and delivered placebo-like safety. If those results are confirmed in phase 3, then ozanimod could become the best in class option for doctors and patients seeking an oral MS therapy, rather than an injection-based therapy.
Currently, the market for oral MS is dominated by Biogen's Tecfidera and Novartis' Gilenya. In the second quarter, those two drugs delivered combined annualized sales of more than $5 billion.
Ozanimod's potential has some industry watchers wondering whether or not a competing bid for Receptos could be coming. Investors shouldn't bank on that, but I suppose anything could happen. As it stands, Receptos is trading at a small discount to Celgene's $232 offer and since that offer is in cash, not stock, there's little risk in sticking around for a while longer to see what happens.
Todd Campbell owns shares of Celgene. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool recommends Celgene. The Motley Fool owns shares of Celgene. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.