Celgene will buy drug developer Receptos for $7.32 billion

Celgene Corporation is buying a California biopharmaceutical company in a deal worth approximately $7.2 billion in cash, it announced Tuesday.

Receptos would give Celgene a third autoimmune drug, treating ulcerative colitis and multiple sclerosis, to round out a lineup of autoimmune treatments to offer to doctors and patients.

“We have been fortunate to have been able to act on several major transactions that position us for sustained and enhanced long-term growth”, said Celgene’s chief executive Bob Hugin during a conference call held yesterday. Over the past five years, deals from $5 billion to $15 billion have commanded a median 35% premium to the 20-day average.

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Phase III ozanimod trials are underway for both ulcerative colitis and relapsing Mississippi. The drug could be approved for Mississippi in 2018, Celgene said, putting the company into a new therapeutic area.

Celgene already has a number of inflammation and immunology drugs, Otezla (apremilast) in psoriasis and psoriatic arthritis, but is does not now have any medicines for MS.

Celgene said Ozanimod has the potential to become the first SIP receptor modulators to be approved for inflammatory bowel disease (IBD).

Cowen & Co’s Eric Schmidt said the deal could be a “steal” for Celgene, if Receptos’ ozinamod proves successful, while Baird Equity Research’s Brian Skorney drew parallels to Gilead Sciences Inc (GILD.O) acquisition of Pharmasset Inc in 2011. Celgene is interested in keeping Receptos employees, but it’s not clear how many will be retained, Geissman said.

Celgene also disclosed its preliminary financial results for the second quarter of 2015. Last month, the company announced it had entered a 10-year collaborative agreement with Juno Therapeutics for $1 billion in an effort to broaden its portfolio in the promising oncology immunotherapies market. Further, the deal price looks fair given the peak sales potential for ozanimod (guidance: “$4-6B) and its stage of development”.

Sales rose 22% to $2.28 bil, the 4th straight quarter of gradual acceleration and just over views. Shares of the San Diego-based company closed at $37.75 a year ago.

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