Bloomberg News reported yesterday that the U.S. Federal Trade Commission (FTC) is expected to introduce a lawsuit to block the proposed merger between Amgen (NASDAQ:AMGN) and Horizon Therapeutics (NASDAQ:HZNP).

The FTC is reportedly worried by the portfolio overlap as both businesses are working on treatments for Lupus and Eczema. Hence, the merger would harm the development of drugs in these areas.

Amgen agreed to pay $27.8 billion to buy Horizon. If the lawsuit is launched, Wells Fargo analysts believe the remedy could be divestiture of the Horizon pipeline as Amgen’s key focus is likely on the marketed products.

“While AMGN and HZNP marketed products do not overlap, recent FTC scrutiny seems to be pushing it a bit further than traditional overlapping markets and investigating if a single player is becoming stronger. Our look at recent instances of FTC lawsuit suggests that 3/6 such deals were either terminated/blocked while other 3 went through,” the analysts said in a client note.

They believe Amgen shares could receive a boost if the deal fails to go through as shareholders mostly didn’t like the deal.

On the other hand, the analysts note that Horizon shares could fall to the $80-90 range. Horizon stock is indicated to open at ~$93 a share, down about 17% in premarket Tuesday.

BMO analysts said investors may become more nervous as Bloomberg’s reporting signals the FTC may be focused on challenging bigger pharma deals.

“If this signals FTC’s view around the broader anticompetitive nature of pharmaceutical mergers, then we could see a potential challenge [to larger transactions],” they said in a note.

RBC analysts are surprised by the potential lawsuit as they see “the minimal portfolio overlap” while potential fold-in assets with AMGN present “minimal concerns of harm or competitiveness to the landscape.”

“We – and inbound investors – have seen a high likelihood of close,” they wrote.

Horizon shares were down 1.3% year-to-day through Monday’s close.