By Michael Dabaie

Five Prime Therapeutics Inc. shares were up 78% to $37.78 in afternoon trading Thursday.

Amgen Inc. agreed to acquire Five Prime Therapeutics for $38 a share in cash, representing an equity value of about $1.9 billion.

The deal includes bemarituzumab, a Phase 3 ready program for gastric cancer.

The acquisition of Five Prime supports Amgen's international expansion strategy, the companies said before the market open.

"Gastric cancer is one of the world's most common forms of cancer and is particularly prevalent in the Asia-Pacific region, where Amgen expects to generate significant volume growth in the coming years. Amgen plans to leverage its presence in Japan and other Asia-Pacific markets to maximize bemarituzumab's potential," the companies said in a release.

Amgen will receive a royalty percentage on future net sales in Greater China ranging from the high teens to the low twenties from a pre-existing co-development and commercialization agreement between Five Prime and Zai Lab (Shanghai) Co. Ltd.

The companies expect the transaction to close by the end of the second quarter.

Amgen reaffirmed its full-year outlook with revenue guidance of $25.8 billion to $26.6 billion and adjusted EPS guidance of $16 to $17.

Shares of Amgen were down 0.5% to $222.74.

"Overall, we view the deal as an incremental positive and bolt-on for Amgen," Mizuho Securities USA said in a note, adding that it still struggles with the overall valuation of Amgen stock.

Mizuho rates Amgen at neutral.

Write to Michael Dabaie at michael.dabaie@wsj.com

(END) Dow Jones Newswires

March 04, 2021 15:19 ET (20:19 GMT)

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