Onyx Pharmaceuticals Inc. (NASDAQ:ONXX), which develops cancer drugs, could soon be the target of a bidding war, as it has attracted interest from pharmaceutical majors Pfizer Inc. (NYSE:PFE) and Novartis AG (NYSE:NVS), after a takeover offer from Amgen Inc. (NASDAQ:AMGN) fell through, Reuters reported.
Onyx, a South San Francisco-based company with a market value of around $9.5 billion, said it rejected a recent offer worth $8.7 billion from Amgen, according to Reuters, saying the offer price was undervalued. Onyx’s appeal stems from the fact that it has three cancer drugs in the market, one of which -- Nexavar -- has grabbed a sizeable market share and is currently undergoing testing for additional uses.
Pfizer, which owes royalties to Onyx for a breast cancer drug under trial, and Novartis, which is trying to strengthen its cancer medicine franchise, have expressed interest in Onyx, Reuters reported, citing unnamed sources.
Amgen, which offered $120 a share for Onyx, has not indicated that it's out of the bidding race, Reuters reported, citing a third source, who added it was likely Amgen would participate in the buyout auction.
Onyx shares gained more than 50 percent to close at $131.33 on Nasdaq on Monday, indicating that investors expected takeover bids to climb higher, Reuters reported, as companies such as Bayer AG (OTCMKTS:BAYRY), AstraZeneca PLC (NYSE:AZN) and Merck & Co. Inc. (NYSE:MRK) were also among those eyeing Onyx, the report said.
Pfizer has obtained the license to market a drug developed by Onyx called Palbociclib, which has been designated as a breakthrough in treating breast cancer and is currently awaiting approval from the U.S. Food and Drug Administration, Forbes reported. The drug has the potential to generate annual sales of $3 billion, of which 8 percent will go to Onyx as royalty, the report added.
German drugmaker Bayer, which partnered with Onyx to sell Nexavar, generating $861 million in annual sales last year, has also gained favor among investors as a potential bidder, Forbes said.
Onyx also presents a lucrative opportunity for Amgen, which is under mounting pressure to revamp its drug development program after a breakdown in sales of its flagship anemia medicine over safety concerns, while patents on four of Amgen’s five best-selling drugs are slated to expire starting in 2015.
Gayathri writes about geopolitics and business for International Business Times. She began her career at the Times of India as news coordinator, before moving on to IBTimes...