Amgen Offers $1.9 Billion to Acquire Five Prime Therapeutics

Source: Streetwise Reports   03/04/2021

Five Prime Therapeutics shares traded 78% higher after the company reported it entered into a definitive agreement to be acquired by biotech giant Amgen for $38 per share in cash.

This morning prior to the open of U.S. markets, clinical-stage biotechnology company Five Prime Therapeutics Inc. (FPRX:NASDAQ), which is focused on the development of immune modulators and targeted treatment for solid tumor cancers, announced that it entered into an agreement to be acquired by Amgen Inc (AMGN:NASDAQ) for $38.00 per share in cash, which represents an equity value of about $1.9 billion.

The report indicated that the merger will serve to incorporate Five Prime’s pipeline with Amgen’s extensive oncology portfolio. Five Prime Therapeutics stated that “its leading asset bemarituzumab is a first-in-class, Phase 3 ready anti-FGFR2b antibody with positive data from a randomized, placebo-controlled Phase 2 study in frontline advanced gastric or gastroesophageal junction (GEJ) cancer.” The company noted that in the Phase 2 FIGHT study, treatment with bemarituzumab showed “clinically meaningful improvements in progression-free survival (PFS), overall survival (OS) and overall response rate (ORR) in the frontline treatment of patients with advanced gastric or GEJ cancer.” The firm added that the data from the trial suggests that there may be additional correlations and benefits in treatment of other epithelial cancers, such as ovarian, breast, lung and other cancers.

The firms noted that the Five Prime acquisition fits well with Amgen’s international expansion strategy. As gastric cancer is classified as one of the world’s most common cancer types and is much more prevalent in the Asia-Pacific region, this area is well aligned with Amgen’s strategy to grow sales in that region in coming years. Amgen will also benefit immediately from owning the existing royalties from future net sales in Greater China under the co-development and commercialization agreement that is already in place between Five Prime and Zai Lab Co. Ltd.

Amgen’s Chairman and CEO commented, “The acquisition of Five Prime offers a compelling opportunity for Amgen to strengthen our oncology portfolio with a promising late-stage, first-in-class global asset to treat gastric cancer…We look forward to welcoming the Five Prime team to Amgen and working with them to leverage our best-in-class monoclonal antibody manufacturing capabilities to supply additional clinical materials, as well as expanded production quantities, to realize the full potential of bemarituzumab for even more patients around the world as quickly as possible.”

Five Prime Therapeutics’ President and CEO Tom Civik remarked, “This is an exciting day for patients who may one day benefit from the promise of bemaritizumab and our full pipeline. I’m so proud of the Five Prime team and the science we’ve pioneered…We see tremendous complementarity between the two companies. Amgen has global reach, world-class resources, and they share our deep passion for science and commitment to patients. I have full confidence that Amgen is the right company to work with us to bring our innovative cancer treatments to patients and to achieve our mission to rewrite cancer.”

The report advised that the transaction has already been approved by the Boards of Directors of both companies and is expected to close by the end of Q2/21. For its part Amgen will make a cash tender offer of $38 per share to acquire 100% of Five Prime’s outstanding common shares. The transaction remains subject to majority stockholder approval from Five Prime shareholders, customary closing conditions and regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

The company explained that “bemarituzumab (anti-FGFR2b) is a first-in-class targeted antibody that blocks fibroblast growth factors (FGFs) from binding and activating FGFR2b, inhibiting several downstream pro-tumor signaling pathways and potentially slowing cancer progression.”

The company stated that gastric (stomach) cancer and GEJ cancer accounts for the third highest cause of cancer deaths worldwide. The firm indicated that globally more than 1 million new cases are diagnosed each year.

Five Prime Therapeutics is a clinical-stage biotechnology company based in South San Francisco, Calif. The firm is engaged in research and development of immuno-oncology and targeted cancer therapies that can be paired with companion diagnostics to identify patients who might be benefit from treatment with its drug candidates.

Amgen is one of the world’s largest biotechnology firms with a market cap of around $130 billion. The company is the owner of numerous patented medicines including Enbrel, Prolia, XGEVA, Neulasta and Aranesp.

Five Prime Therapeutics began the day with a market cap of around $933.3 million with approximately 43.9 million shares outstanding and a short interest of about 5.5%. FPRX shares opened nearly 79% higher today at $38.00 (+$16.74, +78.74%) over yesterday’s $21.26 closing price and reached a new 52-week high this morning of $38.1727. The stock has traded today between $37.70 and $38.18 per share and is currently trading at $37.82 (+$16.56, +77.89%).

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