Shares of Amgen rose in premarket trading today after the biotech giant agreed to buy cancer drugmaker Onyx Pharmaceuticals for $10.4 billion.
The companies announced the deal Sunday. Amgen valued the purchase at $9.7 billion excluding Onyx’s cash.
The deal would give Amgen three approved cancer treatments and several others in clinical testing. Analysts said the approved drugs, which include the liver and kidney cancer treatment Nexavar, and Onyx’s experimental products are both important components in the deal.
The companies expect the purchase valued at $125 per share to close early in the fourth quarter.
Amgen Inc. shares gained $5.40, or 5.1 percent, to $111 in premarket trading today. The stock reached an all-time high of $114.95 in April. Onyx shares rose $6.74, or 5.8 percent, to $123.70 in premarket trading.
In June Onyx rejected an offer from Amgen worth $120 per share.
Citi Investment Research analyst Yaron Werber said the success of the deal hinges on Kyprolis, which was approved in July as a treatment for a type of blood cancer. Onyx makes Nexavar and Stivarga through a partnership with Bayer AG but still owns almost all the marketing rights to Kyprolis. He said the move will help Amgen’s sales.
“The deal will restore much needed top-line growth until the internal pipeline begins to deliver in 2015,” he wrote. Weber rates Amgen shares “Buy” and raised his price target to $136 per share from $130.
Cantor Fitzgerald analyst Mara Goldstein said the deal could boost shares of other companies with promising drugs in late-stage testing.
“We think that Amgen’s actions, coupled with other smaller deals in the sector, have had a positive effect on valuations overall and put the sector in play over the past few months,” Goldstein said.
Date: August 26, 2013
Source: Associated Press
