UPDATED: Celgene shells out $7.2B for Receptos in a big bet on autoimmune disease

Celgene ($CELG) is trading $7.2 billion in cash for Receptos ($RCPT) and its Phase III autoimmune treatment, building on some recent success in the field.

Under the deal, Celgene has agreed to pay $232 per share of the San Diego-headquartered company, a nearly 18% premium to its closing price on Monday. In exchange, the Big Biotech gets ozanimod, formerly RPC1063, which is a promising oral treatment now in Phase III development for ulcerative colitis and multiple sclerosis. If all goes according to plan, the drug could bring in peak annual sales of as much as $6 billion, Celgene figures.

The deal ends months of buyout speculation surrounding Receptos, which has seen its market value nearly double since January. Previous rumors pegged AstraZeneca ($AZN), Gilead Sciences ($GILD) and Teva ($TEVA) as potential suitors, but each company reportedly failed to offer enough cash to sway Receptos.

Celgene, known for making high-dollar bets on the assets it craves, didn't balk at the biotech's price tag. CEO Bob Hugin said buying Receptos gives his company a banner opportunity to further expand in inflammation and immunology, building on the recent FDA approval for Otezla, an oral drug cleared to treat psoriasis and psoriatic arthritis. The buyout also brings in RPC4046, a Phase II treatment for eosinophilic esophagitis.

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Trading $7.2 billion for just two clinical assets is eye-catching, to say the least, but Celgene believes Receptos has a winner in ozanimod, a drug management says has only scratched the surface of its potential.

Celgene's Scott Smith

"Ozanimod is a potentially transformational oral therapy that has demonstrated robust clinical activity with impressive immune-inflammatory modulating properties in Phase II trials," Celgene Inflammation and Immunology President Scott Smith said in a statement. "Ozanimod is a highly differentiated next-generation S1P receptor modulator with important efficacy and safety features that create the opportunity for development across a spectrum of immune-inflammatory diseases."

And Celgene will know soon enough whether the deal was worth it. Ozanimod's two Phase III multiple sclerosis trials are expected to read out in the first half of 2017, potentially supporting an approval the following year. Ulcerative colitis data should be available in 2018, which Celgene believes could make ozanimod the first S1P treatment approved for inflammatory bowel disease.

- read the statement

Special Report: The 25 most influential people in biopharma 2013 - Bob Hugin - Celgene