Shortly after the markets closed on Friday, Canada's Financial Post managed to kick up a fuss on Wall Street with an unconfirmed report that Amgen ($AMGN) had made a very serious overture to buy Onyx Pharmaceuticals ($ONXX) for $120 a share.
"I feel a timely combination of our organizations would be very complementary," Amgen said in a letter to Onyx, according to the Financial Post, which says it got a peek at the love note. And Amgen reportedly went on to praise Onyx on its recent launch of Kyprolis, saying that it felt $120 a share should be just about right.
For Onyx--which was trading at $86.82 with a market cap of $6.3 billion at the close on Friday--that price represented a hefty premium. And traders rose to the bait without so much as a call for verification. Late on Friday the price on Onyx was $109 a share, up 25% in the postreport frenzy.
On Twitter, the immediate speculation focused on whether the Financial Post, not known for big breaking stories on prospective mergers, had a real scoop or was simply getting played by some investors out to make a quick buck. But with representatives of both companies either too flabbergasted to deny the story or just playing it coy, the buzz stayed hot well into the evening. And analysts--drawn by the intriguing detail of the Financial Post story--soon piled in to contribute their opinion about a tie-up.
"Strategically, this deal makes a great deal sense for Amgen, in my opinion," fired off ISI's Mark Schoenebaum, not one to leave a hot report like this to percolate without offering a comment. "As you may know, Amgen already has a very large cancer franchise. Aranesp, neupogen, neulasta, and Xgeva are all major cancer franchises for the company. However none of these drugs are direct anti-tumor agents. Thus, strategically, Onyx's drug Kyprolis would fit in exceptionally well with Amgen's existing sales and marketing infrastructure."
Wall Street loves a rumor, and analysts have been speculating on an Onyx buyout for years. Most of the speculation has centered on Bayer, though, which is partnered with Onyx on Nexavar and controls the lion's share of Stivarga, which pays out 20% royalties to the biotech. The fast-moving multiple myeloma drug Kyprolis (carfilzomib), though, is Onyx's baby.
Amgen came straight out of left field, a surprise that helped feed the intense speculation late Friday.
- here's the story in the Financial Post
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