Celgene to Buy Biotech Drugmaker Receptos for $7.2 Billion

Updated on

Celgene Corp. agreed to acquire Receptos Inc. for $7.2 billion, adding experimental treatments for inflammatory bowel disease and multiple sclerosis.

Celgene will pay $232 a share in cash, according to a statement Tuesday. The deal, expected to close in the third quarter, is a departure for Celgene, which has bet more on partnerships with smaller biotech companies than on outright takeovers.

The acquisition gives Celgene a drug, ozanimod, that will reach annual sales of $4 billion to $6 billion at their peak, Celgene Chief Executive Officer Bob Hugin said on a conference call. The treatment, Receptos’s leading product, is in final-stage studies for relapsing multiple sclerosis, with data expected in 2017.

The drug is also being tested for gastrointestinal inflammatory disorders -- a final-stage trial for ulcerative colitis is ongoing with data expected in 2018, and the company had also planned to test ozanimod in Crohn’s disease.

Receptos shares surged to $228.60 in late trading, while Celgene rose 5.1 percent to $129.11.

In the inflammation and immunology space, Celgene already sells Otezla for psoriasis and psoriatic arthritis. It also has an experimental Crohn’s drug, GED-0301, which is in a final-stage study. Celgene has seven more molecules in mid-stage development, according to Tuesday’s statement.

Full-Year Forecast

Celgene also reported preliminary second-quarter net product sales of $2.25 billion for the second quarter, a 22 percent increase over the prior year. Analysts had projected $2.24 billion, according to the average estimate of analysts compiled by Bloomberg. Preliminary earnings excluding one-time items increased to $1.23 a share from 90 cents. Analysts had estimated $1.13 a share.

Celgene raised its forecast for the year, estimating an adjusted earnings per share of $4.75 to $4.85. Previously, it had forecast adjusted earnings per share of $4.60 to $4.75. It maintained its guidance for 2015 product sales at $9 to $9.5 billion.

Receptos went public on May 8, 2013, at $14 a share, so the acquisition represents a more than 16-fold return in just over two years.

Bloomberg reported in April that Receptos was fielding takeover interest from potential buyers. The company had been seeking a partner to develop ozanimod, and those discussions, with as many as 10 companies, led to takeover interest, people familiar with the matter said at the time.

Celgene is paying a premium of 41 percent over Receptos’s closing price on March 31, the day before Bloomberg reported on the takeover interest.


Play Episode

Before it's here, it's on the Bloomberg Terminal. LEARN MORE