Amgen Finalizes Buyout of Onyx for $10.4 Billion

Jacob Harper  |

Amgen Inc. (AMGN) scored a big win on Aug. 26 when it finally closed the deal to buy Onyx Pharmaceuticals Inc. (ONXX) for $10.4 billion, or $125 a share. Onyx is one of the most promising biotech companies on the market, as their blood cancer drug Kyprolis is seen as a potential blockbuster, with the chance to genertate up to $3 billion in revenue by 2021 alone.

Amgen has long coveted Onyx and Kyprolis, as oncology is one of the fastest growing segments of medicine. With the buyout, Amgen acquires a drug that treats a form of blood cancer called multiple myeloma whose sufferers do not have many other options on the market.

The oncology drugs Amgen currently distributes supportive-care drugs that treat symptoms of chemotherapy and anemia. Kyrpolis, however, treats cancer, and is expected to be in high demand going forward.

Krypolis is one of the most expensive treatments for multiple myeloma on the market. A 28 day cycle costs upwards of $10,000.

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Few knew exactly how valuable Onyx really was until the company spurred the first buyout offer from Amgen that valued them at $120 a share, while they had been trading in the high 80s. Onyx rejected that offer on June 20, and their stock in turn skyrocketed. It looked like a deal would close after Onyx posted a massive revenue beat in the second quarter of 2013, and Amgen upped their offer to $125.

As it seemed like a deal was nearing, Amgen also requested to see data concerning the progress of the Kyprolis’ clinical trials in Europe. Onyx said it wasn’t prepared to release that data, and Amgen assumed this meant the data wasn’t promising.

On this information, Amgen dropped any hints they would sweeten the deal again to $130 a share. It seems Onyx acquiesced. The $125 price is a compromise that both acknowledge Kyrpolis’ shaky status in gaining approval from European regulators and the drug’s still robust potential in the US. Currently, analysts expect Kyprolis to be apporoved in Europe no earlier than 2015.

Onyx shareholders who were in it for the long haul will be walking away with a hefty profit. The stock has quadrupled in value over the last four years. The deal between the two companies is expected to close in the fourth quarter of 2013.

Both company’s stock shot up on the news. Amgen is up 8.34 percent to hit $144.40 a share. Onyx gained 6.64 percent to hit $123.64 a share.

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