Federal regulators will challenge Amgen Inc.’s largest tie-up in biotechnology history. They claim that the tie-up will hinder innovation and slow down the pace of drug research.
The Federal Trade Commission will likely file a lawsuit on Tuesday to block the deal, said the person, who asked not to be named when discussing private information. Horizon shares dropped 15% in trading after hours. Amgen rose 0.6%.
Evan Seigerman is an analyst with. The FTC could change its view of consolidation in the pharmaceutical industry if it files a lawsuit.
He wrote to clients that “We have no data to suggest a lawsuit imminent but we could face a challenge should the FTC apply closer scrutiny to large biotech/pharma M&A.”
Amgen stated that it was not aware of any FTC decision and would provide additional information as soon as it became available. Horizon deferred Amgen. The FTC declined comment.
Elizabeth Warren, a U.S. senator, wrote in January that the Federal Trade Commission should closely scrutinize these deals, and oppose any Big Pharma purchase that would threaten competition, reduce innovations, or increase costs for Americans.
This would be the first time that the FTC had attempted to block an entire pharmaceutical deal in over a decade. The agency has allowed mergers in the industry to proceed as long as companies have divested of any overlapping treatments. Bloomberg Law reported that less than a third of 38 pharmaceutical deals worth $10 billion or higher between 2010 and 2020 were subjected to conditions.
This could change. Lina Khan, the FTC chair appointed by US President Joe Biden, has been more aggressive in her approach to deal-making. She has challenged several major mergers such as Microsoft Corp.’s proposed acquisition Activision Blizzard Inc. The FTC announced in 2021 that it would review its approach to mergers involving drug companies.
Khan, speaking at a workshop on pharma agreements last year, said that “relatively few major drugs have been developed by the largest pharmaceutical firms.” As antitrust enforcers it is our duty to promote competition, which will create the conditions necessary for the next generation scientific advancements.
Amgen’s acquisition of Horizon marks the largest merger in its history, and it is also the first time that FTC has had a chance to test this new approach. The companies do not have a lot of overlap when it comes to expertise. However, both are working on treatments that treat eczema or lupus.
Eczema, a chronic skin inflammation that can affect up to 25 million Americans, is a chronic condition. Amgen and Japan’s Kyowa Kirin Co. jointly announced their partnership in 2021 to develop an anti-eczema antibody treatment called KHK4083. Horizon has partnered up with Q32 Bio to develop its own eczema antibody treatment, ADX-914.
According to the Lupus Foundation of America, Lupus is an autoimmune chronic disease that attacks the internal organs. It affects about 1.5 million Americans, mostly women. Amgen is developing a biologic, efavaleukin, to treat the most common form of lupus. Horizon, on the other hand, has concentrated on Daxdilimab, an antibody-based treatment.
Bloomberg’s analysis of 13F reports shows that Soros Fund Management LLC, Tudor Investment Corp., and Laurion Capital Management LP all increased their Horizon holdings during the first quarter. This was their largest position. LMR Partners LLP, Laurion Capital Management LP and Paulson & Co. also bought the stock. Perceptive Advisors LLC sold the stock.
Bloomberg data shows that Vanguard Group Inc., and BlackRock Inc. are the two largest holders of Horizon shares as of April 30.
Capitol Forum has reported on this suit earlier.