Innovation via acquisition: Amgen acquires Abgenix and secures preclinical, clinical assets

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THOUSAND OAKS, Calif.—April 6, 2006—Following on the April 3 closure of its acquisition of Abgenix, Amgen announced that it would cut 98 workers from the Freemont, Calif.-based operations, according to the San Jose Business Journal. Amgen will continue operations from the Freemont site, however, and the acquisition will not impact employees at the company's other site in Burnaby, British Columbia.
THOUSAND OAKS, Calif.—Biotechnology company Amgen and Abgenix, a company specializing in the discovery, development and manufacture of human therapeutic antibodies, recently signed a definitive merger agreement under which Amgen will acquire Abgenix for approximately $2.2 billion in cash plus the assumption of debt. Under the terms of the agreement, shareholders of Abgenix will receive $22.50 in cash per common share. Amgen anticipates a $0.05 to $0.10 dilution of adjusted earnings per share in 2006 and 2007 and for earnings to be accretive thereafter.
Subsequent to the merger announcement, Amgen has been bullish about touting the fact that with the merger, it now has full ownership of one of its most important advanced pipeline products, panitumumab, which it had been collaborating on with Abgenix since 2002. Amgen was already leading the development and commercialization strategy for panitumumab.
The acquisition of Abgenix also eliminates a tiered royalty due to Abgenix on future sales of denosumab, another pipeline product that is in clinical trials.
But the news isn't all about clinical candidates. In addition to securing various potential preclinical compounds and leads, Amgen also now owns the XenoMouse antibody technology developed by Abgenix, which was used in discovery efforts for panitumumab and denosumab.
"The XenoMouse technology is used to create fully human monoclonal antibodies, the goal of which is to develop antibodies that are less immunogenic," explains Trish Hawkins, an Amgen spokesperson. "That's an important goal in drug discovery and development efforts."
By creating a fully human monoclonal antibody, the XenoMouse technology ensures that there is no murine (mouse) protein in the antibodies, which avoids a human body's immune system response in the form of infusion reactions, allergic reactions or anaphylaxis.
As a result of the merger Amgen will also add to its assets Abgenix's 100,000 square foot manufacturing plant in Fremont, Calif. This facility will not only produce panitumumab but will also add to Amgen's protein manufacturing capabilities for discovery and development efforts.
Although there were no firm details about changes to staffing or management of other acquired assets as of press time, Hawkins did note that Amgen plans to retain "substantially all of the manufacturing staff" that worked for Abgenix.
Amgen believes that potential peak worldwide sales for panitumumab could reach $2 billion or more, assuming success of panitumumab in several clinical trials evaluating multiple lines of therapy in colorectal cancer and head and neck cancer. Hawkins suggests that with Amgen facing such large potential profits and now eliminating the need to pay royalties to Abgenix, this could help boost current and future preclinical efforts by making more money available to the company for research and development.
"Combining with Amgen provides an attractive valuation for our shareholders. We believe this transaction will allow us to advance panitumumab to its full potential for patients and to maximize the value of both Abgenix's growing portfolio of antibody product candidates and our exceptional scientific platform," says Bill Ringo, president and CEO of Abgenix, in a prepared statement. "We have worked closely with Amgen for many years and are very excited about combining Abgenix with the leader in the biotech industry."

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