- The stock price of Five Prime Therapeutics Inc (NASDAQ: FPRX) increased by 78.74% today. This is why it happened.
The stock price of Five Prime Therapeutics Inc (NASDAQ: FPRX) increased by 78.74% today as it went from a previous close of $21.26 to $38. Investors were responding to Amgen (NASDAQ: AMGN) and Five Prime Therapeutics (NASDAQ: FPRX), a clinical-stage biotechnology company focused on developing immuno-oncology and targeted cancer therapies, announcing an agreement under which Amgen will acquire Five Prime Therapeutics for $38 per share in cash, representing an equity value of approximately $1.9 billion. And this acquisition adds Five Prime’s innovative pipeline to Amgen’s leading oncology portfolio.
Why Amgen is buying Five Prime Therapeutics:
– 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 (GEJ) cancer. And bemarituzumab targets FGFR2b — which has been found to be overexpressed in approximately 30% of patients with non-HER2 positive gastric cancer, as well as other solid tumors.
– The bemarituzumab Phase 2 FIGHT trial demonstrated clinically meaningful improvements in progression-free survival (PFS), overall survival (OS) and overall response rate (ORR) in the frontline treatment of patients with advanced gastric or GEJ cancer. And additional analysis showed a positive correlation between efficacy and expression of FGFR2b on tumor cells, confirming both the importance of the FGFR2b target and the activity of bemarituzumab against this target.
– This correlation suggests that FGFR2b could play a role in other epithelial cancers such as lung, breast, ovarian and other cancers.
– The acquisition of Five Prime also supports Amgen’s international expansion strategy. Gastric cancer is known as 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. Plus Amgen plans to utilize its presence in Japan and other Asia-Pacific markets to maximize bemarituzumab’s potential. In addition, as part of this deal, Amgen will receive a royalty percentage on future net sales in Greater China ranging from the high teens to the low twenties from a pre-existing co-development and commercialization agreement between Five Prime and Zai Lab (Shanghai) Co., Ltd.
– Five Prime’s additional innovative pipeline programs complement Amgen’s efforts to bring meaningful therapies to oncology patients.
Deal Terms:
Under the terms of the merger agreement — which was approved by the Boards of Directors of both companies — Amgen will commence a tender offer to acquire all of the outstanding shares of Five Prime’s common stock for $38 per share in cash. And following the completion of the tender offer, a wholly-owned subsidiary of Amgen will merge with Five Prime and shares of Five Prime that have not been tendered and purchased in the tender offer will be converted into the right to receive the same price per share in cash as paid in the tender offer (other than shares held by stockholders who properly demand and perfect appraisal rights under Delaware law). The deal is expected to close by the end of the second quarter and is subject to customary closing conditions, including the tender of at least a majority of the outstanding shares of Five Prime’s common stock and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
Amgen had reaffirmed its full-year outlook with Revenue guidance of $25.8 to $26.6 billion and non-GAAP EPS guidance of $16.00-$17.00.
KEY QUOTES:
“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. We look forward to welcoming the Five Prime team to Amgen and working with them to leverage our best-in-class monoclonal antibody manufacturing capabilities to supply additional clinical materials, as well as expanded production quantities, to realize the full potential of bemarituzumab for even more patients around the world as quickly as possible.”
— Robert A. Bradway, chairman and chief executive officer at Amgen
“This is an exciting day for patients who may one day benefit from the promise of bemaritizumab and our full pipeline. I’m so proud of the Five Prime team and the science we’ve pioneered. We see tremendous complementarity between the two companies. Amgen has global reach, world-class resources, and they share our deep passion for science and commitment to patients. I have full confidence that Amgen is the right company to work with us to bring our innovative cancer treatments to patients and to achieve our mission to rewrite cancer.”
— Tom Civik, president and chief executive officer of Five Prime
Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.
