Potential Onyx Buyers are Lined Up Out the Door

Joe Goldman |

Onyx Pharmaceuticals (ONXX) made headlines in late June when the company rejected a $120 per share takeover bid from Amgen (AMGN) , a 30 percent premium to the stock price at the time. On news that the company would seek out a buyer willing to pay a higher price, shares soared 50 percent during a single trading session.

Onyx is a well-established player in the $61 billion cancer drug market. The company produces Krypolis, an injectable proteasome inhibitor for multiple myeloma, and Nexavar, an oral treatment for liver and kidney cancer.

Onyx also owns 20 percent royalties on Bayer’s stomach cancer drug Stivarga and has a number of drugs in the pipeline. Thus, Onyx is a compelling takeover candidate for larger pharmaceutical companies searching for growth. The following companies are likely interested.

Amgen (AMGN)

Although Amgen has already been rejected once by Onyx, the California-based pharmaceutical giant can’t be counted out as a potential buyer. “Amgen is still interested and doing due diligence,” according to USA Today.

Amgen will probably submit a revised bid in the coming weeks and is likely hard at work determining exactly how much it is willing to pay.

AstraZeneca (AZN)

The British drug maker recently made headlines after Chinese authorities took in an executive for questioning in a case related GlaxoSmithKline’s (GSK) bribery scandal.

However, this controversy will not hinder AstraZeneca’s ability to make deals. The company has acquired two smaller pharmaceutical companies over the past month, spending around $1.5 billion to purchase Omthera Pharmaceuticals and Pearl Therapeutics. The company has struggled to spur organic growth in recent quarters, so its buying spree may not be over yet.

Bayer

Bayer, a German healthcare giant, and Onyx already have a strong working relationship. The two companies have partnered up on two oncology drugs, Strivarga and Nexavar, which are used to treat a variety of cancers.

Many industry experts expect both Strivarga and Nexavar will become best-selling oncology drugs in the near future, so Bayer may wish to claim Onyx’s future royalty rights. Furthermore, integrating Onyx’s pipeline drugs should be a seemless transition since the two companies have worked already worked together.

Pfizer (PFE)

One of the world’s largest pharmaceutical companies by market cap, Pfizer could use Onyx to bolster its portfolio of cancer drugs and proliferate growth prospects.

Pfizer and Onyx have previously worked with one another as well. The two companies collaborated on a small molecule cyclin-dependent kinase 4/6 inhibitor in 1995. If Pfizer ever commercializes the drug, Onyx will be eligible for milestone payments.

Novartis (NVN)

Novartis has one of the strongest portfolios of cancer medicines in the world. The Swiss pharmaceutical company knows the cancer drug sector as good as any other company , so it could make excellent use of Onyx’s current portfolio and pipeline of medicines.

Don’t count them out: Celgene ($CELG), Merck (MRK) , Gilead (GILD) , Bristol-Myers (BMY)

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
GSK GlaxoSmithKline PLC 37.70 0.27 0.72 3,910,786
GILD Gilead Sciences Inc. 72.42 -0.42 -0.58 9,227,901
BMY Bristol-Myers Squibb Company 55.96 0.16 0.29 9,281,504
AMGN Amgen Inc. 144.01 1.62 1.14 3,517,303
PFE Pfizer Inc. 31.63 0.17 0.54 19,007,839
AZN Astrazeneca PLC 25.89 0.08 0.31 8,836,805
CELG Celgene Corporation 117.63 -1.24 -1.04 3,866,633
MRK Merck & Company Inc. (new) 61.13 0.37 0.61 7,993,092
CHLKF China Mobile (Hk) Ltd Ord 11.00 0.00 0.00 0

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