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Amgen to Buy Five Prime for $1.9B to Boost Cancer-Drug Pipeline

Amgen affirmed its full-year outlook after agreeing to pay $1.9 billion cash for Five Prime in an effort to boost its cancer-drug pipeline.
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Amgen  (AMGN)  shares firmed Thursday after the biopharmaceutical giant said it agreed to buy Five Prime Therapeutics  (FPRX)  for $38 a share, or $1.9 billion, cash, beefing up its cancer drug efforts.

Shares of Five Prime, the South San Francisco biotech, leaped on the deal. At last check they were trading up 78% at $37.82. They've traded on Thursday up as much as 80% at a 52-week high $38.18. A bit less than a year ago they were trading at $1.75.

Five Prime focuses on targeted cancer treatments, including ones using the immune system to attack tumors. 

Amgen stock recently traded at $224.98, up 0.5%. It has gained 5% over the past year, lagging the 42% gain of the Nasdaq Composite.

Amgen affirmed its full-year outlook, with revenue guidance of $25.8 billion to $26.6 billion and non-GAAP earnings-per-share guidance of $16 to $17.

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“Five Prime's lead asset, bemarituzumab, is a first-in-class, Phase 3 ready anti-FGFR2b antibody with positive data from a randomized, placebo-controlled Phase 2 study in frontline advanced gastric or gastroesophageal junction cancer,” Amgen said.

“The acquisition of Five Prime also supports Amgen's international expansion strategy. Gastric cancer is one of the world's most common forms of cancer and is particularly prevalent in the Asia-Pacific region, where Amgen expects to generate significant volume growth in the coming years.”

Overall, "the acquisition of Five Prime offers a compelling opportunity for Amgen to strengthen our oncology portfolio with a promising late-stage, first-in-class global asset to treat gastric cancer," said Amgen Chief Executive Robert Bradway.

The companies expect the deal to close by the end of the second quarter. The deal is subject to conditions including antitrust clearance and approval by Five Prime holders.

Last month, Amgen shares fell, even though its earnings exceeded estimates. Fourth-quarter net income per share slipped 3.2%, as revenue rose 7.1% to $6.63 billion.