Shares of Amgen gained nearly 5 percent Monday after the company announced a plan to buy up to $5 billion of its stock.

The stock buyback will use a modified Dutch auction method, in which stockholders indicate how much stock and at what price they wish to sell their stock. The pharmaceutical company has established the price range between $54 and $60 per share. Based on the number of shares offered, Amgen will determine the lowest price that will enable it to purchase $5 billion in shares. All stock will be purchased at the same price.

To finance the stock repurchase program, Amgen plans to issue senior debt notes. Bank of America Merrill Lynch, J.P. Morgan and Morgan Stanley will sell the notes.

“This tender offer reflects Amgen’s confidence in the future outlook of our business,” Kevin Sharer, chief executive at Thousand Oaks-based Amgen, said in a statement. “Our strong balance sheet and cash flow enable us to complete this transaction in an attractive interest rate environment while also preserving the flexibility to further accelerate the growth of our business through focused, strategic acquisitions.”

By midday Monday, shares of Amgen traded on the Nasdaq at $57.84, a gain of $2.65 or 5 percent.