Amgen has agreed to acquire ChemoCentryx for approximately $3.7 billion, the companies said today, in a deal that expands the buyer’s autoimmune portfolio with an approved drug and two clinical phase candidates.
Amgen said the approved drug, Tavneos® (avacopan), will strengthen its pipeline focus on treatments for inflammation and nephrology, which the company says is reflected in its having 11 such candidates under development in various clinical phases.
ChemoCentryx won FDA approval in October for Tavneos as the first approved oral inhibitor of the complement 5a receptor, as an adjunctive treatment for adult patients with severe active anti-neutrophil cytoplasmic autoantibody (ANCA)-associated vasculitis, specifically granulomatosis with polyangiitis (GPA) and microscopic polyangiitis in combination with standard therapy including glucocorticoids. The drug has since received approvals from regulators in Europe and Japan.
“The acquisition of ChemoCentryx represents a compelling opportunity for Amgen to add to our decades-long leadership in inflammation and nephrology with Tavneos,” Amgen Chairman and CEO Robert A. Bradway said in a statement “We are excited to join in the Tavneos launch and help many more patients with this serious and sometimes life-threatening disease for which there remains significant unmet medical need.”
Tavneos has the potential to generate more than $2 billion in unadjusted global sales by 2030, David Risinger, CFA, Head of Diversified Biopharmaceutical Research and a senior managing director with SVB Securities, wrote today in an investor note.
That’s a far cry from the $5.4 million in net sales that Tavneos generated in the first quarter of this year, following $965,000 in U.S. net product sales during the fourth quarter of 2021.
“The complement inhibitor has strong ‘pipeline in a product’ potential, in our view, Risinger wrote.
Risinger based his view on the approximately $2.6 billion in sales generated last year by AstraZeneca subsidiary Alexion’s franchise of complement inhibitors, consisting of four indications at present and several others in development for Soliris® and Ultomiris® with several others in development.
However, Michael Yee, an analyst with Jefferies, noted that his firm has projected peak sales of $1 billion for Tavneos.
“We assume AMGN plans to grow this over the decade towards $1B to add to its overall revenue base and to further diversify its revenue streams away from biosimilar exposure through mid-2026 when denosumab faces some risk as well”—namely competition from biosimilars.
Amgenb markets two versions of denosumab under the names Prolia®, which carries several osteoporosis and cancer-related bone disorder indications, and Xgeva®, indicated for several cancer-related bone disorders.
Prolia generated $852 million in Q1 product sales, up 12% from $758 million in the year-ago quarter; and $3.248 billion for all of 2021, up 18% from $2.763 in 2020. Xgeva racked up $502 million in first-quarter sales, up 7% from $468 million in Q1 2021, and another $2.018 billion in 2021, up 6% from $1.899 billion in 2020.
Filling the sales gap
Amgen will need the billions of dollars in net sales that complement inhibitors can generate due to patent-cliff expirations, Yee and Risinger asserted.
“We don’t believe AMGN’s existing portfolio is sufficient to offset erosion risk in several key products facing losses of exclusivity (LOEs) in 2025-30,” Risinger wrote. “With Tavneos’s U.S. exclusivity through 2036 (if granted patent extension) and the drug’s potential to expand to multiple complement-mediated indications, we believe this transaction is a meaningful step toward filling in that gap, and it also adds catalysts for the stock.”
“The drug also fits well with AMGN’s capabilities in immunology and nephrology, in our view,” Risinger added.
Tavneos is in late-stage clinical development for the treatment of severe hidradenitis suppurativa and C3 glomerulopathy (C3G).
In acquiring ChemoCentryx, Amgen is also acquiring two other inflammatory and autoimmune candidates:
- CCX507, a second-generation inhibitor of the chemokine receptor CCR9 being developed to treat ulcerative colitis; and
- CCX587, an oral small molecule inhibitor of the chemokine receptor CCR6 being developed to treat skin diseases driven by Th17 helper T cells, which when isolated from chronically inflamed human tissues produce high levels of TNF-α and other cytokines. According to ChemoCentryx, high levels of the CCR6 chemokine ligand CCL20 have been found in psoriatic skin, in rheumatoid arthritis joint biopsies, and in asthmatic lungs.
Outside of inflammatory and autoimmune indications, ChemoCentryx’ pipeline includes CCX559, an oral small molecule PD-L1 checkpoint inhibitor being developed to treat advanced solid tumors. Last month, ChemoCentryx presented positive safety results from the first 13 patients enrolled across four dose cohorts: (30 mg, 60 mg, 120 mg, and 180 mg) as of April 27, during a poster session at the 2022 American Society of Clinical Oncology (ASCO) Annual Meeting.
Tavneos and the pipeline candidates join an Amgen inflammation portfolio that includes the marketed drugs Otezla®, Enbrel®, Tezspire®, Amgevita™ (a biosimilar to Humira®), Riabni™ (a biosimilar to Rituxan®), and Avsola® (a biosimilar to Remicade®).
Also in Amgen’s inflammation pipeline are ABP 654, a biosimilar to Stelara® that is in Phase III development; and four Phase II candidates: Efavaleukin alpha for systemic lupus erythematosus and ulcerative colitis; Ordesekimab for celiac disease; Rocatinlimab for atopic dermatitis, and Rozibafusap alfa for systemic lupus erythematosus.
Amgen’s nephrology portfolio includes Epogen®, Aranesp®, Parsabiv® and Sensipar®.
Amgen agreed to acquire ChemoCentryx for $52 a share, a 116% premium over ChemoCentryx’ closing share price yesterday of $23.27.
“With CCXI shares down approx. 35% YTD [year-to-date] (vs. the XBI, which is down ~27%), we believe this deal brings a fair value to CCXI shareholders,” wrote another SVB Securities analyst, Joseph P. Schwartz, Senior Managing Director, Rare Diseases, and a senior research analyst.
XBI is the SPDR S&P Biotech ETF, one of several electronic transfer funds (ETFs) specializing in biotech stocks.
Investors roared their approval of the Amgen takeover by sending ChemoCentryx shares surging today, more than doubling in price to $50.39 as of 11:42 a.m. ET, from yesterday’s close of $24.11. Amgen shares stayed flat, dipping 0.06% from $247.14 to $246.98.
“We have long thought of CCXI as a potential takeout target, especially given the precedent set by AstraZeneca and its acquisition of Alexion Pharmaceuticals,” Schwartz added. “We view AMGN as a logical partner to take the torch from CCXI and continue the launch of Tavneos (avacopan) in ANCA-associated vasculitis/AAV, as well as execute on the earlier stage opportunities in hidradenitis suppurativa (HS), lupus nephritis (HS), and C3 glomerulopathy (C3G).
Yee added that Amgen’s acquisition was consistent with its “bolt-on” approach to acquiring companies with de-risked assets in late clinical phases (such as Five Prime Therapeutics, acquired by Amgen last year for approximately $1.9 billion) or commercial stage (Amgen shelled out $13.4 billion cash in 2019 for Otezla from Celgene as it was about to be acquired by Bristol Myers Squibb for $74 billion).
The acquisition has been unanimously approved by each company’s board of directors and is subject to ChemoCentryx stockholder approval, regulatory approvals and other customary closing conditions. The deal is expected to close in the fourth quarter.
“It is an honor to now join Amgen’s great mission, and together begin a bright new era bringing landscape-shaping medicines like Tavneos to those who will benefit most,” stated Thomas J. Schall, PhD, ChemoCentryx’s President and CEO.