Amgen (AMGN) has agreed to snap up a privately held clinical-stage biotech company, Teneobio, for an upfront cash payment of $900 million. The deal also involves future contingent milestone payments to equity holders of Teneobio, of up to the additional cash worth of $1.6 billion.
Amgen’s R&D EVP David M. Reese said, “The acquisition of Teneobio will strengthen our ability to develop innovative medicines to treat patients with serious illnesses and to bring to market best-in-class products, particularly with respect to multispecific and bispecific medicines directed against targets in a wide range of diseases across our core therapeutic areas.”
Markedly, the acquisition will add Teneobio’s proprietary antibody technologies to Amgen. It will also add TNB-585, a Phase 1 bispecific T cell-engager that will treat metastatic castrate-resistant prostate cancer (mCRPC). Additionally, the deal will provide Amgen with several preclinical oncology pipeline assets that have the potential for near-term IND (investigational new drug application at the FDA) filings, the company said. (See Amgen stock charts on TipRanks)
The acquisition, which awaits certain approvals, is likely to close in the second half of this year.
Recently, Oppenheimer analyst Jay Olson maintained a Buy rating and a price target of $277 (13.2% upside potential) on the stock. The analyst expects Amgen to report earnings per share of $2.85 in Q321.
Last month, Leerink Partners analyst Geoffrey Porges increased the stock’s price target to $238 (2.7% downside potential) from $230, following Amgen’s highlighting of some of its drugs at the American Society of Clinical Oncology (ASCO) annual meeting. Porges maintained a Hold rating on Amgen.
Wall Street analysts are cautiously optimistic on the stock’s outlook. The Moderate Buy consensus rating breaks down into 8 Buy, 7 Hold, and 2 Sell ratings. The average Amgen price target stands at $228.50 and implies downside potential of 6.6% to current levels. Shares have gained about 9% so far this year.
According to the new TipRanks’ Risk Factors tool, the Amgen stock is at risk mainly from two factors: Ability to Sell, and Legal & Regulatory, which contribute 26% and 22%, respectively, to the total risk for the stock. Within the Ability to Sell risk category, AMGN has 7 risks, details of which can be found on the TipRanks website.
