March 04, 2021
BIOINVEST NEWS
Breaking News: Five Prime Therapeutics – FPRX – AMGN To Acquire Five – Prime for $38, TARGET PRICE of $33 More Than Achieved – Move To Sell
This morning, FPRX announced that it is being bought by Amgen for $38 per share (~80% premium to yesterday’s closing price), representing an equity value of approximately $1.9 billion. This is a classic “bolt on” strategy in which the acquirer adds a specific asset or program to augment their pipeline. AMGN has also made it a habit of buying companies, with close to 40 outright acquisitions under their belt. In this case, AMGN did not wait for final Phase III data and is paying for Five Prime based on bemarituzumab’s FIGHT trial data that approximately 30% of patients with non-HER2 positive gastroesophageal cancers overexpress FGFR2b. With AMGN’s $38 buyout exceeding our TARGET PRICE of 33 we are moving FPRX to a SELL.
Along with PCYC, MDCO, CELG and now FPRX – MTSL has recommended at least four companies that have been acquired at significant premiums. We continue to believe that the majority of our Universe of recommendations are potential takeover candidates – especially those with wholly-owned assets like FPRX. Examples of current candidates with key lead standalone compounds are CLDX, ESPR, MDGL, PGEN and VXRT.
We want to acknowledge Rusty Williams who founded FPRX and was the driver behind our original recommendation. We had already recommended Rusty’s two previous biotech stints with the old-school biotech Chiron and then Cor Therapeutics which were both bought for huge premiums. In our view, it is no accident that FPRX was also acquired for a mega premium as Rusty Williams has left a trail of biotech gold where ever he has domiciled.
With AMGN’s $38 buyout exceeding our TARGET PRICE of 33 we are moving FPRX to a SELL.