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Onyx Rejects Amgen’s $10B Bid; Seeks Other Suitors

By Jennifer Boggs
Managing Editor

Shares of Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) jumped more than 50 percent in morning trading after a weekend announcement rejecting an unsolicited bid from Amgen Inc. valuing the company at about $10 billion.

A Canadian newspaper broke the news after market close Friday, and South San Francisco-based Onyx released a statement Sunday rejecting the offer, which values the midcap biotech at $120 per share, a 38 percent premium to Friday’s closing price. Onyx said the Amgen officer “significantly undervalued Onyx and its prospects and was not in the best interest” of the company or its shareholders.

That Onyx is considered an attractive takeout target is not a surprise. As Leerink Swann analyst Howard Liang noted, it’s “among a limited number of small- to midcap companies with a wholly owned product and big enough revenue base and a potential to move the needle for large biopharma companies.”

The timing, however, is surprising, given that many industry observers had expected such takeout offers to come in last fall, following the earlier-than-expected FDA nod for oral multikinase inhibitor Stivarga (regorafenib) in metastatic colorectal cancer, for which Onyx earns 20 percent of net sales from partner Bayer AG. That approval came two months after the accelerated approval of Onyx’s proteasome inhibitor Kyprolis (carfilzomib), acquired in its 2009 buyout of Proteolix Inc., as a third-line treatment in multiple myeloma. (See BioWorld Today, July 23, 2012, and Sept. 28, 2012.)

“M&A speculation was only a whisper in recent weeks/months,” noted analyst Biren Amin, of Jefferies.

But now that Thousand Oaks, Calif.-based Amgen has made the first move, a bidding war could be heating up. Onyx’s board has authorized its financial advisor to contact other interested parties, and Jefferies’ Amin said he believes “multiple suitors could be interested,” including Novartis AG, Bristol-Myers Squibb Co., Bayer, and Astrazeneca plc.

And most analysts agree that it will take more than $120 per share to seal a deal, with estimates ranging from $140 up to $200 per share, depending on how much value is placed on Onyx’s earlier-stage pipeline. Beyond Kyprolis and its Bayer-partnered drugs, Stivarga and Nexavar (sorafenib), the company is working on oprozomib, an oral proteasome inhibitor in Phase Ib/II testing in hematologic malignancies, and ONX 0914, an immunoproteasome inhibitor with potential applications in autoimmune disorders.

See Tuesday's BioWorld Today for More on This Story.