AstraZeneca, Pfizer, Novartis Among Suitors for Onyx

AstraZeneca Plc (AZN), Pfizer Inc. and Novartis AG (NOVN) are among the suitors preparing bids for Onyx Pharmaceuticals Inc. (ONXX), the drugmaker that snubbed an unsolicited offer from Amgen (AMGN) Inc., said two people familiar with the matter.

The companies, which signed confidentiality agreements and hired advisers, may make first-round bids this week, according to the people, who asked not to be named because the process is private. Onyx disclosed last month that it’s working with advisers on finding bidders following its rejection of Amgen’s bid of $120 a share.

Amgen is still interested and is doing due diligence, said three people with knowledge of the process. Shares of South San Francisco, California-based Onyx have consistently traded at more than that price since the proposal from Thousand Oaks, California-based Amgen surfaced in June, indicating the successful suitor may have to beat that offer by a wide margin.

Onyx rose 2.3 percent to $129.25 at the close in New York, giving the company a market value of about $9.4 billion. Representatives for London-based AstraZeneca, Amgen, New York-based Pfizer, Novartis and Onyx declined to comment. There’s no guarantee any of the companies will bid.

Photographer: Paul Thomas/Bloomberg

A logo sits on a sign outside AstraZeneca Plc's factory in Macclesfield, U.K. Close

A logo sits on a sign outside AstraZeneca Plc's factory in Macclesfield, U.K.

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Photographer: Paul Thomas/Bloomberg

A logo sits on a sign outside AstraZeneca Plc's factory in Macclesfield, U.K.

$61.1 Billion

The interest reflects Onyx’s status as an established company in the $61.1 billion global market for cancer medicines, which is growing about 5 percent a year, according to industry-data tracker IMS Health Inc. Onyx said June 30 it enlisted Centerview Partners to help find bidders.

The winner would gain control of Onyx’s blood-cancer treatment Kyprolis, which it sells alone and whose sales may surge about ninefold to $2.4 billion by 2019, according to analyst estimates compiled by Bloomberg. The company also gets a 20 percent royalty on sales of Stivarga for stomach cancer from Bayer AG (BAYN), which has said it expects the drug to be a bestseller.

The biotechnology company also sells Nexavar for liver and kidney cancer in partnership with Germany’s Bayer. Onyx reported $362 million in 2012 revenue, with 80 percent coming from Nexavar and Stivarga.

Kyprolis would be a good fit for Novartis, Jefferies & Co. analysts said this month. The Basel, Switzerland-based company markets Gleevec, a medicine for leukemia, a cancer of the blood and bone marrow, and is developing a multiple myeloma drug.

AstraZeneca Focus

AstraZeneca CEO Pascal Soriot wants to focus on core research areas such as cancer and announced in May that he was moving three experimental cancer treatments into late-stage development earlier than planned. The U.K.’s second-biggest drugmaker advanced development of moxetumomab pasudotox for hairy cell leukemia, olaparib for platinum-sensitive relapsed ovarian cancer and selumetinib for non-small cell lung cancer patients with the KRAS genetic mutation.

A successful bid for Onyx would help AstraZeneca replace sales lost to generic competition as its second-best-selling drug, Seroquel for schizophrenia, no longer has U.S. patent protection. Its patent on Nexium for ulcers, the third-biggest seller, expires in the U.S. in 2014.

Pfizer (PFE) may also be interested in boosting its cancer portfolio. An acquisition would give the world’s biggest drugmaker full ownership of palbociclib, an experimental compound being studied for breast cancer that could be a blockbuster. Onyx has an agreement to get 8 percent of sales of palbociclib, if it’s approved.

To contact the reporters on this story: David Welch in New York at dwelch12@bloomberg.net; Michelle Fay Cortez in Minneapolis at mcortez@bloomberg.net

To contact the editors responsible for this story: Jacqueline Simmons at jackiem@bloomberg.net; Phil Serafino at pserafino@bloomberg.net

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