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Several Wall Street analysts put pencil to paper after Horizon Therapeutics (NASDAQ:HZNP) said Tuesday evening that it was in “highly preliminary” takeover talks with Amgen Inc (NASDAQ:AMGN), Janssen Global Services, LLC (JNJ), and Sanofi (NASDAQ:SNY). A deal price as high as $140 per share was the high watermark discussed by at least two analysts.
Cowen analysts said that given their belief that Tepezza’s previous pause was understandable and resolvable, they viewed the valuation as “meaningfully discounted.”. As such they believe a transaction will occur. They believe at minimum a price above its all-time high (~$120) and potentially closer to their price target ($140) would be reasonable.
Meanwhile, BMO Capital analysts said historical M&A premiums suggest a fair range of ~$23-28B or $98-$118 per share implying a 25-50% premium on Tuesday’s closing price. They see Amgen as the best strategic fit for a deal.
“Amgen has deal capacity for a $28B deal, likely a better strategic fit,” the analysts commented. “As of 3Q22 earnings Amgen had cash on hand of $11B. Given existing debt of $39B, Amgen could finance this deal with debt, but would have to lever up further, which could limit future BD opportunities. Given three major BioPharma bidders, the deal price will be competitive. Amgen may prevail if Horizon is focused on strategic fit, given JnJ’s size and Sanofi’s European roots.”
Guggenheim analysts said they are not surprised by this news as they view Horizon as a “premier biotech company that offers significant growth opportunities across both commercialized and pipeline assets.” The analysts highlighted during its September 2021 R&D day, the company noted that 7 products (Tepezza, Krystexxa, Uplizna + 4 pipeline assets) have the potential to generate approximately $10 billion in sales. . Assuming a deal at about 4x sales multiple, they see deal value in the $25-30B range or about $110-$125/share.
Lastly, Stifel analysts think the base business excluding the pipeline is worth at least $125-130 per share. That said they see a value as high as $140 per share after ascribing some value to at least 4 of the ~13 pipeline programs (Daz in SS and Kidney Transplant 35% PoS, Dax in SLE 35% PoS, and HZN-825 in dcSSc 30% PoS).
Shares of Horizon last traded up 31.5% to $103.60 in pre-open trading Wednesday.
