{"id":9506,"date":"2023-05-16T13:07:37","date_gmt":"2023-05-16T17:07:37","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/ftc-sues-to-block-amgens-27-8-billion-acquisition-of-horizon-therapeutics\/"},"modified":"2023-05-16T13:07:38","modified_gmt":"2023-05-16T17:07:38","slug":"ftc-sues-to-block-amgens-27-8-billion-acquisition-of-horizon-therapeutics","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=9506","title":{"rendered":"FTC Sues to Block Amgen’s $27.8 Billion Acquisition of Horizon Therapeutics"},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

The Federal Trade Commission on Tuesday sued to block
\n Amgen
\n \u2018s $27.8 billion acquisition of
\n Horizon Therapeutics,<\/span>
\n laying out a rationale that, if upheld by federal courts, could broadly undermine the biotechnology ecosystem.<\/p>\n

\n Amgen
\n (ticker: AMGN) and
\n Horizon
\n (HZNP) do not sell competing medications; they have none of the portfolio overlap that is often a concern in pharmaceutical mergers.<\/p>\n

\n

Instead, the FTC said it alleged that Amgen, a large biopharma company, could use the negotiating power of the rest of its portfolio to lock in the monopoly positions of two high-priced Horizon drugs, Tepezza and Krystexxa, which treat thyroid eye disease and chronic refractory gout, respectively.<\/p>\n

\u201cThe value of the rebates that Amgen can offer on its high-volume drugs as part of its cross-market bundles may make it difficult, if not impossible, for smaller rivals who are developing drugs to compete against Tepezza and Krystexxa to match the level of rebates that Amgen would be able to offer,\u201d the FTC said in a statement.<\/p>\n

That argument, if it stands, could be used to block many acquisitions of smaller biotechs with a novel product on the market. That would be highly disruptive to the biotech ecosystem, which is predicated on the expectation that successful biotechs get acquired by large-cap biopharmas.<\/p>\n

\u201cIf allowed to stand, we think this new approach is likely to cast a lasting pall over the sector for some time to come,\u201d
\n Piper Sandler
\n analyst Christopher Raymond wrote in a note early on Tuesday, following reports that the FTC planned to file the lawsuit but before the agency announced it had actually filed.<\/p>\n

The
\n SPDR S&P Biotech
\n exchange-traded fund (XBI), which tracks the biotech sector, was down 3.1% at midday on Tuesday. Horizon shares were down 15%, while Amgen shares were down 1%. Shares of
\n Seagen
\n (SGEN), a cancer-focused biotech whose $43 billion acquisition by
\n Pfizer
\n (PFE) is pending, were down 5%.<\/p>\n

In a statement, Amgen said it was \u201cdisappointed\u201d by the FTC lawsuit, and said it hoped to close the deal by mid-December.<\/p>\n

\u201cThe FTC\u2019s claim that Amgen might \u2018bundle\u2019 these medicines (offer a multi-product discount) at some point in the future is entirely speculative,\u201d Amgen said in its statement. It also said that it had \u201ccommitted\u201d not to bundle the specific Horizon products that the FTC had pointed to as problematic.<\/p>\n

Amgen said it wasn\u2019t aware of any prior deal that had been blocked under the same theory.<\/p>\n

In a separate statement, Horizon said that it \u201cdoes not and has no plans to bundle any of its rare disease medicines,\u201d and that the complaint \u201cis rooted in a theory about potential future \u2018bundled\u2019 contracts with payors and not competitive overlap concerns.\u201d<\/p>\n

The FTC\u2019s focus on bundling ties in to ongoing debates over the role of pharmacy-benefit managers, the entities that negotiate with drugmakers on behalf of insurers. Drugmakers cut deals with the pharmacy-benefit managers, or PBMs, to get their drugs on the lists of medications for which patients are eligible, known as formularies. In order to do so, they often pay significant rebates back to the PBMs.<\/p>\n

Larger drugmakers can use their ability to pay big rebates to secure formulary placement for smaller drugs in their lineups. In its statement, the FTC said that the Amgen lawsuit is tied to its continuing work on PBMs.<\/p>\n

The FTC suit comes amid a wave of aggressive enforcement actions by the agency, including its order in April that the gene sequencing company
\n Illumina
\n (ILMN) divest the early detection cancer company Grail, and its efforts to block
\n Microsoft
\n \u2018s (MSFT) acquisition of videogame maker
\n Activision Blizzard
\n (ATVI).<\/p>\n

Amid the broader antitrust push, FTC Chair Lina Khan has signaled a particular focus on pharmaceutical mergers. \u201cThe pharmaceutical sector is where the life-and-death stakes of our work as antitrust enforcers really comes to the fore,\u201d Khan said at an FTC event on pharmaceutical mergers last year. \u201cReports on the state of competition in the pharmaceutical markets in recent years have been troubling and underscored just how much work there is to be done.\u201d<\/p>\n

In notes early Tuesday, before the case was actually announced, analysts suggested that the FTC suit may not be successful. \u201cThis case looks weak,\u201d Jefferies analyst Akash Tewari wrote.<\/p>\n

Investors will now debate just how bearish the FTC\u2019s lawsuit is for biotech. If the agency is able to block the Horizon deal, will Big Pharma firms be forced to seek earlier-stage deals? What does it mean for biotechs with products on the market right now? \u201cEven the most optimistic VC or financial sponsor has to now factor this into their investment calculus going forward,\u201d Piper Sandler\u2019s Raymond wrote.<\/p>\n

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Callum Keown at callum.keown@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Trade Commission on Tuesday sued to block Amgen \u2018s $27.8 billion acquisition of Horizon Therapeutics, laying out a rationale that, if upheld by federal courts, could broadly undermine the biotechnology ecosystem. Amgen (ticker: AMGN) and Horizon (HZNP) do not sell competing medications; they have none of the portfolio overlap that is often a […]<\/p>\n","protected":false},"author":1,"featured_media":9507,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-9506","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nFTC Sues to Block Amgen's $27.8 Billion Acquisition of Horizon Therapeutics | iFintechWorld<\/title>\n<meta name=\"description\" content=\"The Federal Trade Commission on Tuesday sued to block Amgen \u2018s $27.8 billion acquisition of Horizon Therapeutics, laying out a rationale that, if upheld\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" 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