The insiders — most likely Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)’s bankers — release the confidential information to help drive up the price. You’ll recall that Amgen, Inc. (NASDAQ:AMGN) recently made an unsolicited bid for $120 per share that Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) rejected before putting itself on the auction block. The more potential bidders, the higher Amgen has to raise its bid, assuming, of course, that Amgen, Inc. (NASDAQ:AMGN) believes what’s reported in the press.
The news flow also encourages shareholders to hold the course; shares currently trade well above the $120 offer. The bidding process will take awhile, and if shares fall, it’s easier for bidders to justify a lower final offer.
Here’s a look at the potential suitors, assuming the bankers are telling the truth, of course.
It’s not surprising to see Amgen, Inc. (NASDAQ:AMGN) in the mix of bidders given its initial interest. With its oncology focus, Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) would be a nice fit. At $10 billion, buying Onyx would be the largest purchase Amgen has made since it bought Immunex more than a decade ago. With more than $20 million in the bank, though, Amgen can certainly afford it.
Bristol Myers Squibb Co. (NYSE:BMY) has build much of its medicine bag and pipeline through acquisitions in a strategy it calls “string of pearls,” so acquiring Onyx would just be adding another pearl — albeit a rather large one. A knock on a big pharma company buying Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) is that it would have to work with Onyx’s partner, Bayer, co-marketing their cancer drug Nexavar, but that shouldn’t phase Bristol Myers Squibb Co. (NYSE:BMY) given that it’s worked with Sanofi SA (ADR) (NYSE:SNY) selling Plavix and more recently hocking diabetes drugs with AstraZeneca plc (ADR) (NYSE:AZN).
Onyx would be an interesting fit with Pfizer. They’re competitors of sorts since Pfizer Inc. (NYSE:PFE)’s Sutent works in basically the same way as Onyx’s Nexavar. But the companies have found separate niches with Sutent getting most of its sales from kidney cancer and Nexavar focused on liver cancer, even though it’s also approved for kidney cancer. Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) and Pfizer Inc. (NYSE:PFE) also have a partnership for another cancer drug in development, palbociclib, so buying Onyx would save Pfizer the having to pay the royalty if the drug is approved.