NEW YORK – One of the world’s largest biotechnology firms got a bit larger last week as Amgen (NASDAQ:AMGN) agreed to acquire Onyx Pharmaceuticals (NASDAQ:ONXX) in a deal worth $ 10.4 billion. The deal will give Amgen access to Onyx’s family of anticancer treatments.
Under the terms of the deal, Onyx shareholders will receive $ 125 per share in cash through a tender offer – the transaction is expected to be completed by the end of the year and is subject to regulatory approval.
The deal marks the latest in a series of takeovers in the healthcare industry as many drug makers are seeking to buy new medicines to refresh aging product lines. According to information provided by Standard & Poor’s Capital IQ, the Amgen purchase is among the top five deals by a biotechnology company. Larger transactions include Sanofi-Aventis’ (NYSE:SAN) $20 billion acquisition of Genzyme and Gilead Sciences’ (NASDAQ:GILD) $11 billion acquisition of Pharmasset. The deal is also one of the largest in Amgen’s history, trailing only the company’s $ 17 billion acquisition of Immunex in 2002.
However, rising share prices for biotechnology companies has slowed M&A activity in the sector this year. The Amgen deal is actually $ 10 per share lower than what many analysts had expected. While a number of companies had shown an interest in Onyx, Amgen’s persistence seemed to pay off.
According to industry insiders, the most valuable asset in Onyx’s product line is Kyprolis, which was approved in the United States last July as a last-ditch treatment for multiple myeloma, a bone marrow cancer. That drug recorded sales of $ 125 million in the first half of this year, and many believe it can grow to more than $ 2 billion per year after the drug receives regulatory approval to be used earlier in the course of treatment. Speaking on the deal Amgen CEO, Robert A. Bradway said ‘we have a unique opportunity to add value to Kyprolis, a product which is at an early and promising stage of its launch.’
A former investment banker, Bradway took over as CEO of Amgen in 2012 and has been under pressure to increase the company’s sales as much of their income comes from older drugs. Those drugs that face increasing competition from biosimialars, near copies, as well as the expiration of patent protection.