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From the WSJ: AMGEN likely to buy ONYXX


Amgen Inc. AMGN -0.65%is close to sewing up a deal to buy fellow biotechnology concern Onyx Pharmaceuticals Inc., ONXX -0.54%in a takeover that could be valued at $10.5 billion, according to people familiar with the matter.

A deal between the companies is likely to be announced Monday, if not sooner, the people said Saturday. It would value Onyx at $125 a share in cash, the people said. One of them cautioned that the talks could still fall apart before getting to the finish line.

Earlier
Onyx Expects Suitors to Include Amgen, Pfizer 7/16/2013
How Onyx Transformed Itself Into a Target 7/1/2013
MoneyBeat: Onyx Could Pull $150 a Share Offer Analysts Say 7/1/2013

.Amgen earlier this year approached Onyx with an offer of $120 a share for the company, whose primary attraction is a blood-cancer drug called Kyprolis. Onyx then tried to run an auction to get a better price, but ultimately appears to have been unable to find another party to pay more than Amgen in an acceptable time frame.

Amgen's agreement to raise its offer could be seen as a victory for Onyx, but analysts and investors had expected a higher price than $125 per share in the weeks following the disclosure of Amgen's initial offer.

The New York Times NYT -0.42%earlier reported online that a deal between the two companies is close.

The deal would be the latest involving cancer treatments, a heated area of the drug industry's deal-making. Scientific advances have paved the way for developing new treatments to once intractable conditions, and drug makers have been able to charge high prices for the therapies that receive approval—$10,000 a month or more for some drugs.

Most recently, in June, Johnson & Johnson agreed to buy privately-held cancer drug developer Aragon Pharmaceuticals Inc. for $650 million upfront and up to $350 million in potential milestones.

Despite their promise, deals for cancer biotechs can flame out. Investors' complaints about AstraZeneca PLC's research and development strategy, including a $16 billion purchase of MedImmune in 2007, contributed to a management shake-up last year. To limit the risks, big drug makers have sought to buy firms whose cancer drugs are already approved and on sale.

Onyx, based in San Francisco, is such a cancer biotech. Two of its cancer therapies, Nexavar and Stivarga, are joined with with German drug maker Bayer AG. Onyx's crown jewel is Kyprolis, a blood-cancer treatment approved in the U.S. last year. Onyx doesn't release revenue details for Kyprolis. Last year, Onyx notched $362 million in sales.

So far, Kyprolis is cleared for use in patients in the U.S. who have failed at least two previous multiple myeloma therapies. But the drug is in testing that is aimed to secure approval in Europe, and for use earlier in multiple myeloma treatment.

Such approvals would open the drug up to a much broader pool of patients like rival therapy top sellers Celgene Corp.'s Revlimid and Velcade from Johnson & Johnson and Takeda Pharmaceutical Co. Some analysts expect that sales of Kyprolis, which costs $9,950 a month, could reach $1 billion a year by 2015.

Amgen is taking some risk betting that testing of Kyprolis will demonstrate the drug deserves to win the wider approvals, however. The riskiness of the testing was a subject of dispute during acquisition talks, according to a person familiar with the discussions.

For Amgen, of Thousand Oaks, Calif., the additional revenue would come in handy as its aging blockbusters start facing lower-priced competition over the next few years. The company, which had $17 billion in total revenues last year, has been looking for sales to replace those to be lost amid competition for top-selling products like Neulasta, which treats the low white blood cell counts caused by chemotherapy.

Amgen wants to gain new sales from overseas markets and by selling lower-priced versions of biologic drugs that lost patent protection. Biologic drugs are drugs made from complicated, large molecules. They are often given by injection or intravenously. And it is developing new drugs, including some cancer treatments.

Yet the company's drug development efforts have encountered setbacks. Last year, Amgen halted testing of a pancreatic cancer candidate because the compound wasn't showing a benefit. And Amgen is a few years away from finishing development of compounds, especially one to fight high cholesterol, that are thought to have the biggest commercial potential.