West Coast Editor

The landmark merger of Amgen Inc. and Immunex Corp., valued at $16 billion when first disclosed, came through the battered, reeling market at $10.3 billion.

Amgen, of Thousand Oaks, Calif., completed the deal with Seattle-based Immunex, under the terms of which each share of Immunex stock will be exchanged for a fixed ratio of .44 shares of Amgen stock and $4.50 in cash. Shareholders in May approved the deal, which was disclosed late last year, and the Federal Trade Commission cleared it. (See BioWorld Today, Dec. 18, 2001.)

"Clearly, the reason [Amgen] bought Immunex was for the inflammatory franchise," said Elise Wang, analyst with Salomon Smith Barney in New York. "Going forward, though, I think the story will be about Aranesp [darbepoetin alpha, an anemia treatment that is the second generation of Amgen's Epogen] and Neulasta [pegfilgrastim, the second generation of Neupogen, a white blood cell stimulator]."

Neulasta "we think is doing exceptionally well, by the way," Wang told BioWorld Today. "It's expanding the market for Neupogen instead of cannibalizing it."

The merger agreement consists of 85 percent stock and 15 percent cash. Amgen's shareholders own about 81 percent of the combined company, with Immunex's shareholders possessing the remaining 19 percent.

As part of the merger, Immunex earlier this year divested itself of Leukine (sargramostim), its cancer drug which is similar to Neupogen, selling rights to Schering AG, of Berlin, for about $380 million, but the pair has a blockbuster arthritis franchise in Amgen's Kineret (anakinra) and Immunex's Enbrel (etanercept).

Amgen is expected to discuss second-quarter earnings and its outlook in a conference call July 24. Wang expects dilution from the deal to total 5 percent at most in fiscal 2003, with accretion starting in fiscal 2004. Her earnings-per-share estimates for the combined company are $1.35 for fiscal 2002, $1.66 for fiscal 2003 and $2.14 for fiscal 2004. The 2003 estimate is based on about $1.3 billion in Enbrel sales.

Amgen's stock (NASDAQ:AMGN) closed Tuesday at $32.87, up $1.80. Immunex's shares (NASDAQ:IMNX) were held at $16.99.

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