Cancer-drug developer Onyx Pharmaceuticals Inc. (NASDAQ: ONXX) issued a terse press release yesterday, saying it had “received and rejected” a buyout offer from Amgen Inc. (NASDAQ: AMGN) for $120 per share. Shares of Onyx closed at $86.82 on Friday, so Amgen does not seem to be taking the cheap route.
Onyx said that the offer “significantly undervalued” the company and its future prospects, and “was not in the best interests” of shareholders. According to a report in The Wall Street Journal, the total value of Amgen’s offer was around $10 billion, including convertible notes and options.
This morning, Onyx and Bayer HealthCare announced that the companies had submitted a new thyroid-cancer drug application to the U.S. Food and Drug Administration (FDA) and an application to market the drug in Europe. The drug already is approved for treating liver cancer and if Onyx’s application to the FDA to use the drug to treat thyroid cancer is approved, it would mark the first new treatment for thyroid cancer in 40 years.
Onyx, with a market cap of around $6.5 billion before Amgen’s offer, would benefit from a tie-up with a larger company with more experience and more sales staff to market a new drug. Amgen, with a market cap of around $74 billion, is such a company. Onyx gets the point, and sees the Amgen offer as a good place to start the bidding. It is nothing personal, just business.
Investors appear to agree. In premarket trading this morning Onyx shares are trading up more than 50% at $132.30. The stock’s 52-week range is $63.00 to $101.57.
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