Amgen Inc, the world's leading biotechnology company, and Tularik Inc have jointly signed a definitive merger agreement whereby Tularik will become a wholly-owned subsidiary of Amgen in a stock-for-stock transaction.
The acquisition will combine Amgen's leadership in cellular and molecular biology and medicinal chemistry with Tularik's innovation in gene regulation. It will also dramatically accelerate Amgen's planned expansion into the San Francisco Bay area, a major biotechnology hub.
Under the terms of the agreement, Amgen, in a tax-free transaction, will exchange Tularik common stock for Amgen common stock in a ratio that fixes Tularik's value at $25 per share based on the average Amgen stock price during a set number of trading days prior to the close of the transaction. The value of the transaction as of the anticipated closing date is expected to be approximately $1.3 billion, net of estimated cash to be acquired and net of Amgen's existing ownership of Tularik of approximately 21 per cent.
In addition, there will be a one-time charge related to in-process research and development affecting GAAP earnings per share in the period during which the deal closes. The transaction is expected to close in the second half of 2004. Financial guidance previously provided on December 15, 2003 by Amgen for 2004 adjusted earnings per share will remain unchanged by this transaction.
Amgen expects that this transaction will represent an incremental increase of approximately $100 million per year in Amgen's investment in research and development for the next several years. "Amgen is excited about combining with Tularik, a high-science company that is focused on grievous illnesses and that shares our culture," said Kevin Sharer, chairman and chief executive officer of Amgen. "We are particularly pleased to have David Goeddel, a pioneer in biotechnology, join Amgen in a senior role."
"Tularik's research engine is a rare asset and a great strategic fit. Tularik has a strong team of scientists who share our desire to develop important new therapeutics in inflammation, metabolic diseases and oncology. Amgen and Tularik have complementary chemistry expertise and compound libraries that together strengthen and broaden our discovery capabilities," said Roger M. Perlmutter, MD, Ph D, executive vice president research and development of Amgen. "David Goeddel has built a great organization that will be strengthened by Amgen's significant additional resources including capabilities in protein, antibody, and small molecule modalities, development expertise and commercial power," he said.
Upon the closing of the transaction, Dr Goeddel will become Site Head of Amgen San Francisco, overseeing its research projects on an ongoing basis as well as assisting in the strategic direction of Amgen's pipeline. "Amgen has recognized the value of our employees and our ability to consistently and successfully bring small molecules into the clinic," said David V Goeddel, Ph D, founder and chief executive officer of Tularik. "We built Tularik to improve patients' lives through the creation of novel and superior medicines that regulate gene expression.
Amgen supports this mission, and the combination will allow Tularik researchers to continue with the additional benefit of access to Amgen's global research, development and commercialization capabilities."
The terms of the previous collaboration provided for Amgen and Tularik to jointly embark on multiple oncology-related drug discovery and development programmes over a five-year period. Under this agreement, Amgen committed to pay Tularik up to $21 million per program, $50 million in committed research funding over a five-year period and royalties on net commercial sales of Amgen products resulting from the collaboration.
In aggregate, Amgen had committed to pay $125 million in funding and potentially additional significant success related payments. As a result of this acquisition Amgen will add Tularik's five novel clinical programs and approximately 300 Tularik research scientists in therapeutic areas of interest. Tularik programmes include potential treatments for cancer (hepatocellular, gastric and oesophageal) as well as potential treatments for inflammatory diseases, type 2 diabetes and obesity.
The boards of directors of Amgen and Tularik have approved the transaction, which is subject to clearance under the Hart-Scott-Rodino Anti-Trust-Improvement Act. This transaction is also subject to the approval of the stockholders of Tularik and other customary closing conditions.
Tularik is engaged in the discovery and development of a broad range of novel and superior orally available medicines that act through the regulation of gene expression.