HZNP: In Talks w/ Big Pharmas on Buyout

Sanofi and Amgen are bringing cash to cover the table stakes for the Horizon M&A game
John Carroll
Editor & Founder

With the market cap on Horizon Therapeutics $HZNP pushed up to the $23 billion mark today, one of the Big Pharmas in the hunt for a major league buyout deal signaled it’s playing the M&A game with cash.

Paris-based Sanofi, where CEO Paul Hudson has been largely focused on some risky biotech acquisitions to win some respect for its future pipeline prospects, issued a statement early Friday — complying with Rule 2.12 of the Irish takeover rules — making clear that while the certainty or size of an offer can’t be determined, any offer “will be solely in cash.” And Amgen CEO Robert Bradway came right in behind him, filing a statement on the London Stock Exchange overnight that any offer they may make will “likely” be in cash as well.

There’s still no word from J&J about a cash commitment, but it’s the biggest conglomerate in biopharma.

Horizon officially flicked on the time clock for the buyout this week after the Wall Street Journal disclosed that Sanofi, Amgen and J&J were all actively interested in a bid. The year has been largely disappointing when it comes to expectations on M&A, as biotech shares crumbled in a post-pandemic meltdown. Instead of hunting exciting but high-risk deals, the big players — with some exceptions — have been going after de-risked late-stage or commercial assets. And that’s been the theme despite some heavy cash reserves among the top 15 pharma companies.

The pharma giants now have until January 10 to put up or shut up on a bid, staying in line with takeover rules meant to publicly regulate the M&A game for Irish-based companies like Horizon, which operates out of the Chicago area.

Horizon CEO Tim Walbert, who changed the company strategy to emphasize rare disease drugs sold at high cost, recently projected net sales this year at $3.6 billion, whetting investors’ appetites with their blockbuster sales projections for Krystexxa and Tepezza.

SVB’s David Risinger has been handicapping the players, noting J&J’s presence at the deal table right after its $16.6 billion device buyout for Abiomed. Krystexxa and Tepezza would both fit neatly into that portfolio. For Amgen and Sanofi, Horizon’s focus on immunology and inflammation along with rare diseases makes sense, but “we do not know if (Sanofi) management wants to pursue an acquisition the size of HZNP when the company has solid organic growth prospects beyond the US patent expiration of Aubagio in spring 2023.”

Horizon’s stock is up about 30% this week.