Amgen Agrees to Buy DeCode Genetics for $415 Million

Amgen Inc. (AMGN), the world’s largest biotechnology company, agreed to buy the genetic-research company DeCode Genetics Inc. for $415 million to help it develop new medicines that target defective DNA.

The all-cash deal will give Amgen access to Reykjavik, Iceland-based DeCode’s technology used to sequence human genomes, Thousand Oaks, California-based Amgen said today in a statement. The transaction doesn’t require regulatory approval and is expected to be completed by the end of the year.

Closely held DeCode emerged from bankruptcy in 2010 and its owners include private equity firms Polaris Venture Partners and ARCH Venture Partners LP. DeCode’s research enables it to identify genetic variants that may be linked to a disease or disorders, such as cancers or heart disease. Amgen plans to use the technology to develop treatments targeting those defective genes.

“This gives us the ability to help use choose the right targets and walk away from targets that are less attractive,” said Sean Harper, Amgen’s executive vice president for research and development, in a telephone interview.

Amgen rose 1.6 percent to $89.74 at the close in New York. Shares have gained 40 percent this year.

New Products

Amgen has been looking for new products and acquisitions to help shore up revenue as its former core anemia business declines. Earlier this year, the company acquired Micromet Inc. for $1.16 billion to add an experimental leukemia drug, signed a development deal with London-based AstraZeneca Plc and boosted its presence in the cancer market through sales of Xgeva, a bone drug that reduces fractures.

For more than a decade, DeCode had the capabilities to identify gene variants in a large population though it was difficult to use that information to develop drugs. That has changed in the past several years as the company developed a way to look within genes to find variations that affect the actual function of proteins or biological processes, said Kari Stefansson, the company’s chief executive officer who founded DeCode in 1996.

“This is a magical moment when it comes to the possibility of utilizing genetics,” Stefansson said in a telephone interview. “I have been dreaming of a moment when we can have an impact on health care through genetics.”

Results could be far off, Eric Schmidt, an analyst with Cowen & Co., said in an e-mail.

“I know Amgen is hoping that DeCode’s genomic technologies will help direct and prioritize its early-stage pipeline,” Schmidt said. “Way too early to know whether things will work out this way. Maybe we’ll get an answer in 10 years.”

To contact the reporter on this story: Shannon Pettypiece in New York at spettypiece@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net