Reports say FTC is planning to block Amgen’s Horizon deal

Shares in Horizon Therapeutics have been in sharp decline after reports emerged that the US financial regulator is preparing a challenge to its $28 billion takeover by Amgen.

The stock fell 18% in after-hours trading after rumours started to fly that the Federal Trade Commission (FTC) is preparing to announce legal action to block the transaction later today, following a closed-door meeting last Friday.

Neither company has responded officially yet to the speculation about the prospects for the deal, which was agreed in December after Sanofi and Johnson & Johnson pulled out of the running for Dublin-based Horizon. The FTC asked for additional information about the transaction in January.

Amgen is hoping to gain a handful of already-marketed drug therapies through the deal, including Tepezza (teprotumumab), a treatment for the painful autoimmune condition thyroid eye disease (TED) that is well on course to become a multibillion-dollar seller with revenues of more than $400 million in the first three months of the year.

There have been mutterings about the possibility of regulatory opposition to the merger for some weeks, after US Senator Elizabeth Warren (D-Mass) cited it in a letter to the FTC that expressed concerns about “rampant consolidation in the pharmaceutical industry and its impact on drug affordability and access.”

In the letter, Warren singled out the Amgen-Horizon deal as presenting “numerous antitrust and price gouging concerns,” saying both companies had “engaged in brazen price increases on drugs that face little or no competition.”

She said the deal was particularly alarming as Horizon’s portfolio includes various highly-priced drugs for orphan disease, including Tepezza – which costs $433,000 per course—and $700,000-a-year Ravicti (glycerol phenylbutyrate) for inborn urea disorders.

The letter doesn’t point to any specific antitrust issues, the FTC’s usual grounds for blocking M&A deals, so shareholders and market observers are on tenterhooks waiting to see the thrust of the FTC lawsuit if it emerges.

If consolidation in the pharma industry in general becomes a contentious issue, there are fears that other big acquisitions could come in for resistance, notably Merck & Co’s $43 billion play for Seagen. Shares in the latter were also weaker after hours, down almost 5% at the time of writing.

In the meantime, Amgen and Horizon are waiting to hear from a court in Ireland that will rule on the proposed transaction later this month. They have previously said the aim is to complete the deal in the first half of this year.

Photo by John Matychuk on Unsplash