From a post by saw_bucks on the yahoo board.
<Onyx Pharma's Appeal Increases After Insights On Bayer DealFont size: A | A | A3:21 PM ET 11/4/10 | Dow Jones
By Jennifer Cummings
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Biopharmaceutical company Onyx Pharmaceuticals Inc. (ONXX) may start looking a lot more attractive to potential suitors next month.
The new allure comes after Onyx late Wednesday eased fears that an acquisition of the company would trigger much lower payments from its partnership with Germany-based Bayer AG (BAYRY) on the liver and kidney cancer drug Nexavar.
Shares of Onyx were recently up 5.6% to $28.19 on three times the average daily volume. The gains came even after the company reported mixed third-quarter results and lowered its 2010 global net sales guidance for Nexavar.
The momentum was sparked by new insights Onyx provided in a regulatory filing Wednesday about a clause in its partnership with Bayer.
Under the terms of the pact, their 50-50 profit-sharing agreement on the drug would end if Onyx were taken over, and Bayer would instead pay royalties to the newly formed company.
This so-called "change of control" clause has been an overhang on Onyx's shares because it was expected to trigger much lower payments to the company, likely detracting potential suitors.
But on Wednesday Onxx revealed new details about this clause, saying that as of Dec. 20 -- the fifth anniversary of the approval of Nexavar in kidney cancer -- the structure of the agreement with Bayer adjusts, and after that date, the value of the royalty payments will be "substantially equivalent" to the current 50-50 profit sharing agreement.
Onyx declined to comment on its potential as a takeover candidate and said it isn't actively pursuing a sale.
"If we receive an offer, the Onyx board of directors will evaluate the opportunity and what is best for shareholders, but we remain focused on building a standalone leading biopharmaceutical company," spokeswoman Lori Melancon told Dow Jones Newswires.
However, analysts said the new insights increase the appeal of the company.
"In our view, this significantly opens the playing field next year to potential acquirers looking for rights to a marketed cancer drug," Canaccord Adams said in a note Thursday.
Stifel Nicolaus & Co. analyst Stephen Willey said that while he thinks this will make a "non-Bayer acquisition of Onyx a bit more friendly," he noted that ongoing litigation between Onyx and Bayer could still put off potential acquirers.
Nexavar is Onyx's only approved product, and the company is working with Bayer on expanding the drug into other treatment areas, including late-stage lung cancer. Onyx also has a multiple myeloma drug, carfilzomib, in clinical trials and plans to file for U.S. approval of the drug in 2011.
-By Jennifer Cummings, Dow Jones Newswires; 212-416-2474; jennifer.cummings@dowjones.com>
