Amgen ( AMGN) is reportedly pursuing a deal to acquire Immunex ( IMNX) for as much as $18 billion in cash and stock, according to media reports.

Talk of a deal between the two biotech firms hit Wall Street early Thursday morning, driving shares of Immunex up about 10%. The rumors were then given more credence by a later CNBC report that says the companies are in advanced merger talks. Amgen is reportedly offering to buy Immunex for a price in the low $30 range. One possible snag: American Home Products ( AHP) owns 41% of Immunex and if reports are correct, may have marketing rights to future drugs.

Shares of Immunex jumped $3.04, or 12%, to $27.49 a share in recent trading. Amgen is off $2.75, or 4%, to $61.65.

The deal, if consummated, is risky for Amgen because it would be dilutive to earnings over the next few years, which would force it to restate current growth estimates. The big attraction at Immunex is its rheumatoid arthritis drug, Enbrel, which is expected to rack up 2001 sales of about $750 million. But Enbrel sales growth has been constrained by a lack of the drug's supply, and there is significant competition on the horizon from rival drugs. Immunex also has a weak late-stage drug pipeline.

On the positive side, Amgen recently received Food and Drug Administration approval for its own rheumatoid arthritis drug, dubbed Kineret. The company might be betting that it can create significant efficiencies by bringing the two drugs under the same roof.

Neither company is commenting on the merger rumors.

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