Who Could Buy Onyx Pharmaceuticals, Inc. (ONXX) and at What Price?

Any buyer would be wary of putting an inordinate value to the jewel in Onyx’s crown – Kyprolis – as it has not been granted full approval. It was given an accelerated approval, which is granted to drugs that address a real medical need. Such approvals may be cancelled if the drug fails in larger trials. Since results of two trials of Kyprolis are due later this year, any potential buyer would prefer to wait before bettering Amgen’s offer of $10 billion.

Although it is widely believed that Kyprolis will pull through for expanded use, there are concerns about its safety in regard to its effect on cardiovascular health. Cancer physicians already have an alternative in the shape of Takeda’s Velcade ( Bortezomib), the first therapeutic proteasome inhibitor to be approved in the U.S. for treating relapsed multiple myeloma.

The other issue is with the antitrust law. Pfizer already has a drug for kidney cancer – Sutent. If it wants to buy Onyx and bypass antitrust issues, it will have to sell Onyx’s rights to Nexavar to Bayer and retain only palbociclib and Kyprolis. While the former is still in late stage trials, the issues with Kyprolis have been outlined above. Celgene too would have to struggle with antitrust laws as it already has multiple drugs for multiple myeloma.

If I was to buy Onyx at this point, I would keep in mind that the price that Amgen offered – $120 – was arrived at after due diligence. The surge in Onyx stock price is simply market hysteria and I would not buy at this price.

The article Who Could Buy Onyx and at What Price? originally appeared on Fool.com and is written by Kanak Kanti.

Dr. Kanak Kanti De has no position in any stocks mentioned. The Motley Fool recommends Celgene. Kanak is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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