Amgen rips off its $10B M&A cap, looking for deals “large and small”

Robert A. Bradway

You can put Amgen $AMGN on the list of biotech’s big game hunters.

In their quarterly meeting with analysts Thursday, Amgen CEO Bob Bradway said his $40 billion cache of cash gives him the flexibility to take a hard look at a variety of acquisitions this year, big and small.

For some time, Amgen set a $10 billion cap on deals, which is about what it paid for Onyx. This time? There isn’t a cap.

“I think we have felt for some time that we have considerable flexibility to do transactions,” Bradway noted. “And when we’ve talked in the past about the kinds of things we’re looking at, we’ve often talked about it in the context of the big plate of things that we have internally that we’re working through.”

“But we feel like we’re in a place now where we can look externally for large and small opportunities to help grow the business. So I think the message is, we’re confident in the outlook for our company. We’re confident in the importance of innovation. And we’ve got a balance sheet that supports our ability to look at transactions large and small.”

About the only caveat that Bradway had to offer was his interest in seeing what President Trump has in mind for tax reform, which could free up more revenue and allow the big companies to repatriate billions in offshore cash.

CFO David Meline seconded that:

“I guess from my perspective, I don’t really view us even today pre-tax reform as having some arbitrary cap in terms of what we can look at. We think we need to look at all opportunities of all sizes.”

There was the usual reference to staying “disciplined,” meaning that they won’t want to be branded as spendthrifts after any deal. But there was also no reference to the high valuations in biotech these days, indicating that Amgen is willing to bid high for what it really wants.

There’s a long list of companies now in a buying mode, scouring their respective fields for deals. Pfizer’s Ian Read has been an eager player for some time. Sanofi needs to show it can complete a deal after Medivation and Actelion got away. Gilead, Biogen and others are frequently cited on the list of industry hunters in need of a deal.

But so far there’s been more talk than action. Last year proved disappointing for M&A watchers. But 2017 is off to a fast start, with deals for Actelion and Ariad. We’ll see if Bradway is ready to get serious, or just likes talking a good buyout game.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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