Cancer-drug company Celgene Corp. said Tuesday it will pay $7.2
billion for Receptos Inc. in a bid to move deeper into the
multibillion-dollar market for autoimmune diseases.
Under the terms, Celgene will pay $232 a share for Receptos, a
12% premium to Tuesday's closing price. Receptos stock, which
traded at $107.22 a share in late January, had risen in recent
months amid takeover speculation.
Celgene, which expects the deal to close in the third quarter,
has been trying to diversify beyond its foothold in drugs treating
multiple myeloma. About 65% of its $7.6 billion in 2014 total
product sales came from just one of these drugs, Revlimid. But such
blood-cancer drugs are aging and rivals are challenging
patents.
Drugs for autoimmune diseases like rheumatoid arthritis,
ulcerative colitis and psoriasis, offer one of the pharmaceutical
industry's biggest markets. Summit, N.J.-based Celgene pegs the
market at $67 billion in sales last year and the potential to reach
$93 billion in 2020. Humira, the world's top-selling drug, treats
autoimmune diseases.
Last year, the Food and Drug Administration approved a Celgene
drug called Otezla for psoriasis, and the company is developing
another therapy for Crohn's disease.
Receptos would give Celgene a third autoimmune drug, treating
ulcerative colitis and multiple sclerosis, to round out a lineup of
autoimmune treatments to offer to doctors and patients. The San
Diego biotech has been in the later stages of developing the drug,
dubbed Ozanimod. Celgene estimates the drug could have $4 billion
to $6 billion in yearly sales if it wins approval.
"We're creating a complementary portfolio," Celgene CEO Robert
Hugin said in a conference call with analysts reviewing the deal.
He said Ozanimod will help Celgene "really build a major
franchise."
The transaction is the latest in a hot deals market in the drug
industry. Celgene has been among the big deal makers, agreeing last
month to pay $1 billion upfront to Juno Therapeutics Inc. to
acquire a 10% stake and collaborate on the development of cancer
immunotherapies.
Mr. Hugin said Celgene expects the Receptos deal to add to
earnings starting in 2019.
Celgene CFO Peter Kellogg said the company would use its own
cash as well as offer about $5 billion in bonds in August to
finance the transaction. Receptos has $600 million in cash, Celgene
said.
As a result of the Receptos agreement, Celgene is raising its
financial targets for 2020, projecting net product sales of more
than $21 billion.
Celgene reports earnings later this month, but said it expects
second-quarter earnings of $2.3 billion, up 22% over the period a
year earlier, and adjusted earnings per share to increase 37% to
$1.23, including a six-cent gain on the sale of an equity
investment.
Josh Beckerman contributed to this article
Write to Jonathan D. Rockoff at jonathan.rockoff@wsj.com
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