Not a bubblicious price
Sure, Onyx investors would have preferred a higher price, but as an industry, reasonable prices are healthier. Crazy valuations can only last for so long. Eventually they fall back to reality (often below it).
Amgen’s final offer looks like a pretty decent price. At $125, I expected a CVR that would have given investors a piece of the upside if Onyx’s drugs exceeded expectations. Amgen’s investors sure seem to think the company got a good deal; shares are up 8% as I write this.
It’s clear Amgen and the other potential suitors that bowed out before then weren’t willing to go overboard to acquire Onyx. After the recent run up in biotech valuations and the ease that biotechs have had in going public, I’ve become increasingly worried that the valuations have gotten out of hand. Amgen’s lower-than-expected takeout price is a sign that there’s some sanity to the market.
The article The Amgen-Onyx Deal Should Make All Biotech Investors Happy originally appeared on Fool.com is written by Brian Orelli.
Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Seattle Genetics.
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