Amgen set for deal with rival Onyx

AMGEN is near an agreement to buy Onyx Pharmaceuticals, the manufacturer of the cancer drug Kyprolis, for about $125 a share, people familiar with the matter said at the weekend.

The $9.16bn, all-cash deal might be announced as soon as today, said the people, who declined to be identified because the talks are private. The deal might be valued at as much as $10.5bn due to preferred shares, one of the people said.

The price would be 6.9% more than South San Francisco, California-based Onyx’s closing price of $116.96 on Friday.

Kyprolis was approved last year for some patients with multiple myeloma, and may draw more than $3bn in revenue by 2021, according to analysts’ estimates compiled by Bloomberg. The deal is likely to give Amgen a boost as Kyprolis sales rise and bolsters an oncology pipeline that will help expand Thousand Oaks, California-based Amgen’s roster of medicines and increase revenue, the foundation of which are drugs such as Aranesp to combat anemia.

The parties agreed to a lower price after they could not resolve a dispute about Onyx drug data requested by Amgen, said one of the people.

Amgen had offered $130 a share, people said previously.

The price might still change slightly, said one of the people, although it was likely to be close to $125 per share.

Spokeswomen for Amgen and Onyx both declined to comment.

The deal is not finalised and may still fall apart. Onyx had rejected a $120-a-share overture from Amgen in June and opened itself up to other bidders. AstraZeneca, Pfizer and Novartis had also expressed interest, Bloomberg reported last month.

While Amgen’s original $120a-share bid was 37% more than Onyx’s 20-day average before it was disclosed, the stock soared past that price after the offer became public, signalling investors expected competing offers. A deal valuing Onyx at as much as $10.5bn would be the third-largest acquisition of a biotechnology firm in the past three years, according to data.

Since August 2010, 62 biotechnology deals each valued at $50m or more were announced, with an average disclosed price of $1.29bn and an average premium of 55%. Sanofi’s 2011 purchase of rare-disease drug manufacturer Genzyme for $20.1bn was the largest.