Amgen Incorporated agreed to buy Onyx Pharmaceuticals Incorporated in a $10.4bn transaction that gives Amgen access to a rapidly expanding cancer market with a new product that offers sure revenue.
Bloomberg News reports that Amgen will pay $125 a share for Onyx’s outstanding stock, the companies said in a statement.
Onyx’s Kyprolis, approved last year for a rare blood cancer, may spur more than $3bn in revenue by 2021, according to analyst estimates compiled by Bloomberg.
South San Francisco-based Onyx is now studying the medicine in an expanded group of patients.
The accord mirrors recent deals in which drugmakers bought companies with one or two promising products, rather than attempting large mergers that come with whole pipelines or offer business synergies.
Kyprolis fills a hole for Amgen in a product line that largely contains drugs to support rather than treat cancer patients, at a time when the oncology market is growing increasingly important as the U.S. population ages.
“It’s a steal for Amgen,” said Ori Hershkovitz, a partner at Sphera Funds Management Ltd., a Tel Aviv-based health-care hedge fund that holds both Onyx and Amgen shares.
“It has secured its long-term growth. Securing your long-term growth for $10bn, I think you made a good acquisition.”
Amgen rose by 7.2 per cent to $113.20 at 9:46 a.m. New York time after gaining 26 percent in the 12 months through last week. Onyx gained 5.7 per cent to $123.61.
The next buyout within the drug industry may involve Alexion Pharmaceuticals Incorporated, another single-product company whose blood-disease treatment Soliris generated $1.1bn in sales last year as one of the world’s most expensive medicines.
Alexion engaged Goldman Sachs Group Inc. as an adviser as it prepared for a possible takeover offer from Roche Holding AG, people with knowledge of the matter said last month.
Amgen’s deal for Onyx follows similar agreements featuring a small number of already-marketed or late-stage experimental drugs.
Last year, for example, Bristol-Myers Squibb Company bought Inhibitex Incorporared and Amylin Pharmaceuticals to gain individual treatments for diabetes and hepatitis C.
The chief executives for both Pfizer Incorporated and Merck & Company have said this year that they prefer similar “bolt-ons,” rather than mergers that come with a slate of products.
While Thousand Oaks, California-based Amgen has gained from its dominance of the anemia market, the company has been seeking products to expand its product portfolio in cancer.