This is BIG NEWS, especially for a Sunday afternoon:
Amgen to Acquire Onyx Pharmaceuticals for $125 per Share in Cash
Attractive Addition to Amgen’s Leading Oncology Portfolio and Pipeline
Kyprolis(R) (carfilzomib) for Injection Is at Early Stages of Launch in Multiple Myeloma; Showing Strong Physician Support
Acquisition Expected to Contribute to Growth and Value for Amgen Shareholders
THOUSAND OAKS, CA and SOUTH SAN FRANCISCO, CA–(Marketwired – August 25, 2013) – Amgen (NASDAQ: AMGN) and Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) today announced that their Boards of Directors have unanimously approved a transaction under which Amgen will acquire all of the outstanding shares of Onyx for $125 per share in cash. The purchase price is $10.4 billion, or $9.7 billion net of estimated Onyx cash.
Onyx Pharmaceuticals, Inc. is a global biopharmaceutical company engaged in the development and commercialization of innovative therapies for improving the lives of people with cancer. Onyx has an important and growing multiple myeloma franchise, with Kyprolis® (carfilzomib) for Injection already approved in the United States (U.S.). In addition, Onyx has three partnered oncology assets: Nexavar® (sorafenib) tablets (an Onyx and Bayer HealthCare Pharmaceuticals, Inc. compound), Stivarga® (regorafenib) tablets (a Bayer compound), and palbociclib (a Pfizer, Inc. compound). Onyx also has multiple oncology compounds in various stages of clinical development.
Amgen intends to effect the transaction through a tender offer and expects to close at the beginning of the fourth quarter, subject to the satisfaction of customary closing conditions, including the receipt of regulatory clearance.
“We believe that Amgen is strongly positioned to realize the full potential of Onyx’s portfolio and pipeline for the benefit of physicians and patients,” said Robert A. Bradway, chairman and chief executive officer at Amgen. “Our acquisition follows a thorough due diligence process and is fully consistent with our strategy of advancing innovative medicines that address serious unmet medical needs. We expect this acquisition will accelerate growth and enhance value for Amgen shareholders.
“Amgen has a unique opportunity to add value to Kyprolis, a product which is at an early and promising stage of its launch,” Bradway continued.
Onyx holds global rights to Kyprolis, excluding Japan. Kyprolis has an orphan drug designation in the U.S. with exclusivity until July 2019, and patents in the U.S. which extend until at least 2025.
Amgen will benefit from the global rights to Onyx’s innovative oncology portfolio and pipeline. Amgen intends to leverage its oncology capabilities and experience to support Onyx’s clinical development programs and maximize Kyprolis’ potential in the U.S. and the rest of the world.
The acquisition of Onyx also adds to Amgen’s robust late-stage pipeline. This pipeline includes nine innovative products for which registration-enabling data are anticipated by 2016. Four of these are innovative, first-in-class oncology. Onyx’s pipeline complements Amgen’s growing oncology portfolio.
In addition to accelerating Amgen’s revenue growth, the acquisition of Onyx is expected to be accretive to Amgen’s adjusted net income in 2015.
“After a careful and thorough evaluation process, our Board of Directors has determined that the all-cash transaction with Amgen maximizes value for our stockholders and expands the potential of our commercial medicines and clinical pipeline to reach more patients globally,” said Dr. Tony Coles, chairman and chief executive officer of Onyx.
Coles continued, “We are pleased to have reached this agreement with Amgen, a company that shares Onyx’s vision for innovation on behalf of patients. This transaction is an important affirmation of the meaningful value our employees have created, and we look forward to rewarding our stockholders with an immediate and attractive premium.”
Bradway concluded, “Our two companies share a strong culture of innovation and a focus on patient needs. I look forward to bringing the talented people of Onyx and Amgen together as we continue to fulfill our commitment to unlocking the potential of biology for patients suffering from serious illnesses.”
Benefits of the Transaction
Excellent Strategic Fit: Amgen’s strategy is to advance innovative medicines that address serious unmet medical needs.
- Amgen is a global leader in oncology. As a focused oncology company, Onyx’s products and pipeline strengthen Amgen’s leading position in this field.
- Onyx’s oncology pipeline adds to Amgen’s existing pipeline that addresses areas of serious unmet medical need. Amgen’s current pipeline includes nine products for which registration-enabling data are anticipated by 2016.
- The acquisition of Onyx enables Amgen to continue building its position in international markets, capitalizing on its worldwide commercial, development and manufacturing capabilities. Onyx has global rights to Kyprolis (excluding Japan) and has clinical trials underway supporting an expected European Union (EU) filing in 2014.
- Amgen’s track record in quality and reliability of supply and efficiency in manufacturing will bring an added source of value to the Onyx portfolio.
- The transaction is expected to deliver meaningful revenue growth and return on capital and to be accretive to adjusted net income in 2015. This will support Amgen’s commitment to continue to meaningfully increase its dividend over time.
Positions Amgen to Address Growing Patient Needs in Multiple Myeloma
- Kyprolis is at an early stage of its launch, with global rights, excluding Japan, held by Onyx. It has an orphan drug designation in the U.S. with exclusivity until July 2019, and patents in the U.S. which extend until at least 2025. Amgen believes there is a significant opportunity to grow Kyprolis, including potential expansion into earlier lines of multiple myeloma treatment and into international markets.
Ongoing studies to support and extend Kyprolis’ position in multiple myeloma include:
- The ASPIRE trial, which is investigating the addition of Kyprolis to Revlimid®(lenalidomide)(1) and dexamethasone in patients with relapsed multiple myeloma who have received one to three prior therapies. An interim analysis is expected to read out in 2014. ASPIRE is the confirmatory trial for full U.S. approval as well as a registration-enabling study for relapsed multiple myeloma in the U.S. and EU.
- The FOCUS trial, which could support the EU filing for the indication of relapsed/refractory multiple myeloma, is also expected to read out in 2014.
- The ENDEAVOR trial, underway to compare Kyprolis to Velcade® (bortezomib)(2) in patients with relapsed multiple myeloma who have received one to three prior therapies.
- The CLARION trial, underway to compare Kyprolis to Velcade in patients with newly diagnosed multiple myeloma.
- Oprozomib, an investigational oral proteasome inhibitor, is in Phase 1b/2 trials and has the potential to play an important future role in the management of multiple myeloma.
- Across the multiple myeloma platform, Amgen’s experience in oncology can help guide Onyx’s pipeline to successful approval and reimbursement.
(1) Revlimid® is a registered trademark of Celgene Corporation.
(2) Velcade® is a registered trademark of Millennium Pharmaceuticals, Inc.
Provides Additional Sources of Revenue Growth and Profitability
- Nexavar® (sorafenib) tablets is Onyx and Bayer’s oral kinase inhibitor, currently approved in the U.S. for unresectable hepatocellular carcinoma (HCC) and advanced renal cell carcinoma (RCC). It is being studied in locally advanced or metastatic HER2 negative breast cancer. Nexavar has also been submitted for U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) approval for the treatment of radioactive iodine-refractory differentiated thyroid cancer. Nexavar is co-developed by Onyx and Bayer except in Japan where Bayer manages all development. The companies co-promote Nexavar in the U.S. Outside of the U.S., Bayer has exclusive marketing rights, and Bayer and Onyx share profits globally, excluding Japan.
- Stivarga® (regorafenib) tablets is Bayer’s oral multiple kinase inhibitor, currently approved in the U.S. for the treatment of patients with metastatic colorectal cancer (mCRC) who have been previously treated with fluoropyrimidine-, oxaliplatin- and irinotecan-based chemotherapy, an anti-VEGF therapy, and, if KRAS wild type, an anti-EGFR therapy. It is also indicated for the treatment of patients with locally advanced, unresectable or metastatic gastrointestinal stromal tumor (GIST) who have been previously treated with imatinib mesylate and sunitinib malate. Stivarga is a Bayer compound developed by Bayer and jointly promoted by Bayer and Onyx in the U.S. In 2011, Bayer entered into an agreement with Onyx, under which Onyx receives a 20 percent royalty on all global net sales of Stivarga in oncology.
- Palbociclib is Pfizer’s investigational oral, small molecule cyclin-dependent kinase 4/6 inhibitor being developed by Pfizer in a Phase 3 trial for ER+, HER2-negative advanced breast cancer. Palbociclib has received Breakthrough Therapy designation by the FDA based on preliminary Phase 2 data showing improvement in median progression-free survival in combination therapy. Onyx will receive an eight percent royalty on future worldwide sales of palbociclib.
Financing and Approvals
Amgen will finance the acquisition with $8.1 billion in committed bank loans and the balance with cash available in the U.S. The loans have five year terms and carry an average interest charge of LIBOR plus 104 basis points. Amgen expects to retain its investment grade credit rating following this transaction and remains committed to meaningfully increasing the dividend over time. The transaction is subject to the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary closing conditions.
Lazard is acting as lead advisor to Amgen; BofA Merrill Lynch is acting as co-advisor and is also lead arranger for the financing; and Sullivan & Cromwell LLP is serving as legal counsel. Centerview Partners, LLC is acting as financial advisor to Onyx and Goodwin Procter, LLP is serving as legal counsel.
This is a blockbuster announcement! I’m not a financial expert or advisor; I don’t think my minor in economics from the University of Wisconsin counts. I am aware that Amgen is facing a large number of sizable Medicare related fines and penalties. But that doesn’t seem to have slowed this deal down!
There will be buzz about this for weeks. On the surface I would think it would be in a myeloma patient’s best interest to have a larger company than Onyx handling Kyprolis. But that remains to be seen.
And your guess is as good as mine about how each company’s stock will be priced tomorrow. I will keep you updated as soon as some of the dust clears.
One thing is for certain: Myeloma therapy equals big bucks!
Feel good and keep smiling! Pat