Amgen Boosts Cancer Drive With $1.9 Billion Five Prime Deal

(Bloomberg) -- Amgen Inc. has agreed to buy Five Prime Therapeutics Inc. for $1.9 billion in cash, targeting an experimental therapy for a type of gastric cancer particularly prevalent in the Asia-Pacific region.

Under the agreement, Amgen will pay $38 a share for Five Prime, a substantial premium over its closing stock price of $21.26 on Wednesday, according to a statement from the companies on Thursday. The transaction is expected to close by the end of the second quarter.

The deal will give Amgen access to Five Prime’s lead drug, bemarituzumab, an experimental treatment for a form of gastric cancer that is moving into final-stage studies. While the therapy offers a strong profile against a certain type of gastric cancer, it may also have a role to play against other malignancies, including breast and ovarian cancer, Amgen officials said in a call with analysts Thursday.

While Five Prime’s opportunity in the gastric cancer market may be small in the U.S., “it could provide a significant opportunity in Asia” where Amgen has a strong presence, Robyn Karnauskas, an analyst at Truist Securities, said in a note.

Thousand Oaks, California-based Amgen’s shares gained 0.2% to $224.29 at 12:31 pm. in New York trading.

Five Prime, based in South San Francisco, is focused on developing drugs that harness the immune system to fight tumors. Bemarituzumab is “about as good as it gets as a late-stage oncology asset,” said David Reese, Amgen’s executive vice president of Research and Development, during the Thursday call.

Growth Area

Five Prime’s therapy targets a gene found to be aggressively expressed in approximately 30% of patients with the disease, one of the world’s most common forms of cancer. Because of its prevalence in the Asia-Pacific region -- a key growth area for Amgen -- the company plans to leverage the drug’s presence in those markets to maximize its potential.

Thousand Oaks, California-based Amgen will receive a percentage on future net sales in China ranging from the high teens to the low twenties from a pre-existing co-development and commercialization agreement between Five Prime and Zai Lab Co., according to the statement.

While the pandemic has caused many investors to focus on vaccines and therapeutics for Covid-19, some drugmakers have continued to build up their roster of cancer treatments. Gilead Sciences Inc., which sells the virus treatment remdesivir, last year spent $21 billion to acquire breast-cancer drug maker Immunomedics Inc.

However, Reese said the acquisition of Five Prime doesn’t mean the company’s focus has shifted oncology. The company is continuing to develop a broad base of other-type therapies, he said.

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