Monday, July 01, 2013

Some Onyx Pharmaceuticals

I initiated a starter position (making up ~ 6% of my portfolio) today in Onyx Pharmaceuticals, Inc. (Ticker: ONXX) at $130.81. It looks like all the big players (Amgen  (Ticker: AMGN), Novartis (Ticker: NVS), Pfizer (Ticker: PFE), etc...) are all over this one. Onyx has always been looking to sell itself and the move by Amgen has put the company in play. This one is going to be fun to watch…


At July 09, 2013, Anonymous Anonymous said...


Good article to ponder in regards to the ONXX sales process.

Onyx sale depends on key clinical trial readouts
July 9, 2013 at 8:50 AM

"Speculation and chatter in the biopharma space last week was all about Onyx Pharmaceutical Inc.'s rebuff of Amgen Inc.'s $10 billion, $120 per share unsolicited acquisition offer -- and Onyx's announcement that the bid was too low and that it is now seeking other purchase offers.

South San Francisco-based Onyx's stock skyrocketed 50%, from an $86.82 close on June 28 to $130 on July 1, the first day of trading after the announcement. Since then, one of the most frequent questions has been who will make the next move -- perhaps Amgen will up the bid (most certainly) -- and other bidders will step in (again, without question). But who? Bristol-Myers Squibb? Novartis? Pfizer Inc.? Onyx's conservative German partner in Nexavar, Bayer AG?

Perhaps the most important question, though, is how much will the winning bidder pay? Analysts who follow the company have projected scenarios valuing Onyx from a bear case of $100 per share to a bullish $175 a share. Most believe the price will land between $140 and $160 per share.

One little-reported fact is that the results of either of two clinical trials Onyx expects by year's end or early 2014 could greatly affect its valuation, or even stall a deal if one is in progress.

Onyx's Kyprolis is a next-generation proteasome inhibitor that received accelerated approval in the U.S. last year. Accelerated approval means that the Food and Drug Administration allowed Onyx to market the drug based on midstage clinical trial results and that it still has to complete a Phase 3 trial with an endpoint of progression-free survival to remain on the market. That Phase 3 trial is called Aspire, and top-line results are expected by the end of 2013 or early 2014.

Kyprolis is a key element in Onyx's valuation. The market for treatments for multiple myeloma, a cancer of specific white blood cells, is estimated to double, from $5.2 billion in 2011 to $10.2 billion in 2018. That market is made up of three indications: first line, which means it can be used as an initial therapy; relapsed, for those whose cancer has returned after treatment; and relapsed/refractory, which includes those who have relapsed and haven't responded to another therapy. That is the indication for which Kyprolis is now approved.

The launch of Kyprolis has been fairly good, according to ISI Group biotechnology analyst Mark Schoenebaum, with revenue of $64 million in first quarter 2013, its second full quarter after launch. "That shows this drug has rapidly been adopted," he added.

The other clinical trial Schoenebaum points to is Focus. Good results there "could potentially double the market size" for Kyprolis, he noted, because it would support the drug's bid for the relapsed indication. A readout of those data is expected by the end of the year.

The fact that Amgen made its bid prior to the end of these studies shows that Amgen's management expects them to succeed, Schoenebaum noted.

Indeed, he emphasized, even if Onyx and whichever company is buying it agree on an initial price, a surprise in either the Focus or Aspire trials could "complicate things," Schoenebaum pointed out, causing either party to re-evaluate and perhaps reprice the potential acquisition."




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