Amgen's Pending Horizon Acquisition Looks Complementary in Immunology, but Questions Remain

We don't expect to make any significant changes to our $255 fair value estimate for Amgen as a result of the firm's proposed acquisition of Horizon Therapeutics for $28 billion, or $116.50 per share. Amgen expects to close the acquisition in the first half of 2023, bringing several new marketed immunology drugs into its portfolio. Overall, we think at least three key Horizon drugs will help support Amgen's growth and wide economic moat during a potentially difficult period of competitive threats, as osteoporosis drug Prolia faces biosimilar competition (in 2025) and Otezla growth slows due to branded competition from Bristol's Sotyktu. Amgen has confirmed its continued commitment to increasing the dividend, and we don't expect the additional debt incurred as it absorbs Horizon to be a significant burden, given strong expected cash flows for the combined firm.