Thousand Oaks-based Amgen, one of the biggest biotech companies in the world, will get bigger with the $1.9 billion acquisition of Five Prime Therapeutics, a clinical-stage biotech company developing stomach cancer therapies.

Amgen announced the acquisition March 4 and the deal is expected to close by the end of the second quarter of 2021.

Under the agreement, Amgen will pay $38 a share for Five Prime Therapeutics.

That’s a 79% premium over Five Prime’s March 3 closing price of $21.23. Five Prime stock jumped to $38 after the sale was announced March 4.

Amgen finished the day at $221.91, down less than 1%.

Five Prime is based in South San Francisco. Its leading asset is bemarituzumab, which Amgen said will be its “immediate focus.”

Bemarituzumab is moving into Phase 3 development as a potential frontline therapy for patients battling advanced gastric or gastroesophageal junction cancer.

Bemarituzumab has been shown to target a gene that can be found in organ tumors common in some types of gastric cancer, Amgen said in a company news release.

Bemarituzumab has demonstrated clinically meaningful improvements in progression-free survival, overall survival and overall response rate in the frontline treatment of patients with advanced gastric or gastroesophageal junction cancer.

“It has the potential to address a very significant global unmet medical need,” Amgen’s head of research and development, Dave Reese, said during a March 4 conference call on the acquisition. “Gastric cancer is the third most common cause of cancer death worldwide with over 1 million new cases diagnosed annually.”

Gastric cancer is particularly prevalent in Asia, Reese said.

“There are nearly as many cases of gastric cancer in China, Japan and Korea as there are all major solid tumors in the United States,” he said.

Amgen, which expects to generate significant sales growth in the Asia-Pacific region, said it plans to leverage its current presence in Japan and other Asian markets to maximize bemarituzumab’s potential.

As part of the acquisition, 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.

“The number in the U.S. is obviously smaller on a per-capita basis, given the epidemiology of the disease in China, Japan and other markets in Asia,” Murdo Gordon, Amgen’s executive vice president of global commercial operations, said during the call. “But we think that the addressable opportunity here is in the neighborhood of about 30,000 patients in the U.S. on an annual incidence perspective.”

The gene that bemarituzumab targets can also be found in other solid tumors, and new evidence suggests it could be found in cancers including lung, breast and ovarian, according to Amgen’s news release.

As a result, Reese said, Amgen intends to test the drug in tumor types other than gastric.

He added that the first priority after gastric cancer would be in lung cancer, though the immediate focus remains on gastric cancer.

Amgen currently has two ongoing programs targeting proteins also highly expressed in gastric cancer, according to Reese. 

The acquisition of bemarituzumab “very nicely complements these efforts and adds to our internal expertise,” he said.