The $9.16 billion, all-cash deal may be announced as soon as tomorrow, said the people, who declined to be identified because the talks are private. The deal may be valued at as much as $10.5 billion, due to preferred shares, one of the people said. The price would be 6.9 percent more than South San Francisco, California-based Onyx’s closing price of $116.96 on Aug. 23.
Kyprolis was approved last year for some patients with multiple myeloma, and may draw more than $3 billion in revenue by 2021, according to analysts’ estimates compiled by Bloomberg. The deal would give Amgen a likely 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 couldn’t resolve a dispute about Onyx drug data requested by Amgen, said one of the people. Amgen had offered $130 a share, people said previously.
“Onyx shareholders have to be a little disappointed,” Erik Gordon, a professor at the University of Michigan’s Ross School of Business, said in an e-mail. “They are getting a premium, but they’re not getting the $130-$145 that many were expecting. The other potential buyers who had expressed an interest passed on making bids.”
The price may still change slightly, said one of the people, though it was likely to be close to $125 per share. Spokeswomen for Amgen and Onyx both declined to comment when reached by telephone yesterday. The New York Times reported yesterday that the sides were near a deal for $125 a share.
The agreement is not finalized 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 Plc, Pfizer Inc. and Novartis AG had also expressed interest, Bloomberg reported in July.
Onyx also sells Nexavar for liver and kidney cancer in partnership with Germany’s Bayer AG. (BAYN) Onyx generated $362 million in 2012 revenue, with 80 percent coming from Nexavar and the stomach-cancer treatment Stivarga. The company gets a 20 percent royalty on Stivarga from Bayer, which has said it expects the medicine to be a bestseller.
While Amgen’s original $120-a-share bid was 37 percent more than Onyx’s 20-day average before it was disclosed, the stock soared past that price after the offer became public, signaling investors expected competing offers.
A deal valuing Onyx at as much as $10.5 billion would be the third-largest acquisition of a biotechnology company in the past three years, according to data compiled by Bloomberg. Since August 2010, 62 biotechnology deals valued at $50 million or more were announced, with an average disclosed price of $1.29 billion and an average premium of 55 percent, the data show.
Sanofi’s 2011 purchase of rare-disease drugmaker Genzyme Corp. for $20.1 billion was the largest, followed by Gilead Sciences Inc.’s purchase of Pharmasset Inc. for $10.6 billion.
For Amgen, an acquisition of Onyx will be its second-largest ever, after its 2001 purchase of Immunex Corp. for $16.8 billion, data compiled by Bloomberg show. Amgen’s next-largest deal was its 2005 acquisition of Abgenix Inc. for $2.21 billion.
While Amgen has benefited from its dominance in its core anemia business, the company has been seeking new products and acquisitions to expand its product portfolio. Eight late-stage medicines are in development that will generate clinical trial data over the next three years, Chief Executive Officer Robert Bradway said in February.
The company also is increasing its effort overseas and signed an agreement in May with Tokyo-based Astellas Pharma Inc. to develop experimental medicines for cancer and other diseases.
In July 2011, Amgen became the first biotechnology company to pay a dividend. The company also has engaged in share buyback programs of more than $12 billion during the past three years. Investors have rewarded the company, pushing Amgen’s shares close to a 10-year high.
The stock fell less than 1 percent to $105.60 in trading on Aug. 23.
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