Amgen (AMGN) to Acquire Otezla from Celgene (CELG) for $13.4B

Amgen (NASDAQ: AMGN) announced today that it has entered into an agreement with Celgene Corporation (NASDAQ: CELG) in connection with its previously announced merger with Bristol-Myers Squibb Company (NYSE: BMY) to acquire worldwide rights to Otezla® (apremilast), the only oral, non-biologic treatment for psoriasis and psoriatic arthritis, and certain related assets and liabilities, for $13.4 billion in cash, or approximately $11.2 billion, net of the present value of $2.2 billion in anticipated future cash tax benefits. Amgen believes that the acquisition of Otezla offers many benefits including:

• A strong strategic fit with Amgen's long-standing expertise in psoriasis and inflammation
• A differentiated, oral therapy complementary to Amgen's existing inflammation franchise of innovative biologics and biosimilar products
• At least low double-digit Otezla sales growth, on average, over the next five years
• Acceleration of Amgen's near- and long-term revenue growth
• Immediate non-GAAP EPS accretion
• Intellectual Property exclusivity through at least 2028 in the U.S.
• Worldwide rights which fit well with Amgen's international presence and global expansion objectives
• Support of increased R&D investment in 2020 to advance Amgen's innovative pipeline of first-in-class molecules
• No interruption in deployment of Amgen's capital allocation priorities

"The acquisition of Otezla offers a unique opportunity for Amgen to provide patients an innovative oral therapy for psoriasis and psoriatic arthritis that fits squarely within our portfolio and complements our Enbrel® and AMGEVITA® brands," said Robert A. Bradway, chairman and chief executive officer at Amgen. "We will take advantage of our 20 years of experience in inflammatory disease to realize the full global potential of Otezla as an affordable option for patients with these serious, chronic inflammatory conditions."

Otezla is the leading treatment in the post-topical, pre-biologic segment in its approved indications. Otezla is currently approved for three indications in the U.S.—the treatment of patients with moderate-to-severe plaque psoriasis who are candidates for phototherapy or systemic therapy; adult patients with active psoriatic arthritis; and adult patients with oral ulcers associated with Behçet's Disease. Otezla is approved in more than 50 markets outside the U.S., including the European Union and Japan, and has patent exclusivity through at least 2028 in the U.S.

Sales of Otezla in 2018 were $1.6 billion driven by strong volume growth. Amgen has stated previously that it will focus on medicines that can deliver sustained, long-term volume driven growth and the Company believes there is a significant opportunity to grow Otezla through global expansion and new indications, with expectations for Otezla to realize at least low double-digit sales growth, on average, over the next five years.

Strategic Benefits of the TransactionThis transaction will advance Amgen's strategy in several ways:

• Bringing Innovative Medicines to Patients -- The number of patients suffering from chronic inflammatory diseases is growing worldwide. Amgen is already a leader in this very large therapeutic category with Enbrel® (etanercept), a biologic medicine marketed by Amgen in the U.S. and Canada to treat several chronic inflammatory diseases, including moderate-to-severe rheumatoid arthritis, moderate-to-severe plaque psoriasis, and psoriatic arthritis (PsA). ENBREL and Otezla are complementary. ENBREL is most frequently prescribed to treat moderate-to-severe rheumatoid arthritis, while Otezla is positioned as a therapy of first-choice in patients with moderate-to-severe psoriasis who are not satisfied with topical therapies given its differentiated mechanism of action and established efficacy and safety profile. In PsA, Otezla is positioned for use in patients early in their disease and/or with moderate joint involvement. Additionally, studies are currently underway exploring potential new indications for Otezla, including mild-to-moderate psoriasis.
• Expanding Geographic Reach -- Otezla is approved in 54 countries, including major markets such as France, Germany and Japan. Amgen is well positioned to continue driving Otezla international sales growth.
• Investing for Long-Term Growth with Uninterrupted Capital Allocation Plans -- The transaction is expected to contribute to Amgen's near- and long-term revenue growth rate and will be immediately accretive from close to non-GAAP earnings per share growth, with acceleration thereafter. Amgen will finance the transaction with current balance sheet cash and expects to retain its investment grade credit rating. Additionally, Amgen's capital allocation priorities will remain unchanged as we invest to grow our business through internal investment and business development, maintain an optimal capital structure to minimize our Weighted Average Cost of Capital and continue to provide capital returns to shareholders through a growing dividend and continued share repurchases.

The closing of the acquisition is contingent on Bristol-Myers Squibb entering into a consent decree with the Federal Trade Commission in connection with the pending Celgene merger, the closing of the pending merger with Celgene and the satisfaction of other customary closing conditions. The transaction is expected to close by the end of 2019.

"Otezla represents an exciting opportunity to strengthen Amgen's presence in inflammation and continue Amgen's geographic expansion," said Bradway. "We are excited about the opportunity that Otezla represents for Amgen, for our shareholders, and for patients worldwide, and we look forward to welcoming those staff members who support Otezla to the Amgen family."

Dyal Co. LLC is acting as the lead financial advisor to Amgen. Goldman Sachs & Co. is serving as a financial advisor and Sullivan & Cromwell LLP is serving as legal advisor to Amgen.

Amgen To Webcast Investor Call on Otezla AcquisitionAmgen will host a webcast investor call on Monday, Aug. 26 at 5 a.m. PT (8 a.m. ET). Participating in the call from Amgen will be Robert A. Bradway, chairman and chief executive officer, and other members of Amgen's senior management team.

Live audio of the investor meeting will be broadcast over the internet simultaneously and will be available to members of the news media, investors and the general public.

The webcast, as with other selected presentations regarding developments in Amgen's business given at certain investor and medical conferences, can be accessed on Amgen's website, www.amgen.com, under Investors. Information regarding presentation times, webcast availability and webcast links are noted on Amgen's Investor Relations Events Calendar. The webcast will be archived and available for replay for at least 90 days after the event.

Non-GAAP Financial MeasuresIn this press release we reference non-GAAP EPS. We use non-GAAP EPS in connection with our own budgeting and financial planning internally to evaluate the performance of our business. Non-GAAP EPS is derived by excluding certain amounts, expenses or income, from EPS determined in accordance with GAAP. The determination of the amounts that are excluded from non-GAAP EPS is a matter of management judgment and depend upon, among other factors, the nature of the underlying expense or income amounts recognized in a given period. Historically, management has excluded the following items from non-GAAP EPS, and such items may also be excluded in future periods and could be significant: expenses related to acquisition of businesses, including amortization and/or impairment of acquired in intangible assets, including in-process research and development, inventory step-ups, adjustments to contingent consideration, integration costs, severance and retention costs and transaction costs; charges associated with restructuring or cost saving initiatives, including but not limited to asset impairments, accelerated depreciation, severance costs and lease abandonment charges; legal settlements or awards; non-routine settlements with tax authorities; and the impact of the adoption of the U.S. corporate tax reform. Non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.

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