Flush with cash, Onyx Pharma shops for new drugs

Onyx CEO Tony Coles

Onyx Pharmaceuticals ($ONXX) has climbed the list of deal-hungry biopharma companies. CEO Tony Coles has built an enviable war chest after a stellar year, and he wants to buy or advance new drugs that could take the company to the next level of the pharma industry.

Coles owes much of the financial might to Kyprolis, the South San Francisco-based company's multiple myeloma drug approved by the FDA in July. As Dow Jones Newswires noted, the company's stock price has doubled since the month of the key approval as blockbuster excitement swelled for the new product. And Coles & Co. capitalized on demand for Onyx shares with a $352 million stock sale in January, following a calendar 2012 wrapped up with $492.8 million in the bank.

Last week Coles spoke to investors about his desire to put this capital to work through a combination of internal R&D--largely with trials aimed at expanding the uses of its cancer drugs Kyprolis and Nexavar, which is partnered with Bayer--as well as smart M&A or licensing moves that bolster the company's pipeline. Though Onyx often gets named as a prime buyout target for Big Pharma outfits, Coles laid out a growth plan that clearly puts his company on the buying side of the bargaining table.  

"We've got great prospects for this company, so there is every indication that we should just keep going on our own," Coles told the news wire after an investor meeting in New York on March 14. "The way to build a successful, sustainable business is through acquisitions, either companies or products--even licensing deals."

Those "great prospects" include a royalty stream from sales of Stivarga, Bayer's next-gen version of Nexavar that has won recent approvals for treating colorectal and gastrointestinal cancers. And an experienced executive team led by Coles has proven successful in other deals, including the one that brought Onyx rights to Kyprolis (carfilzomib) from a 2009 buyout of Proteolix.

Sanford C. Bernstein analyst Geoff Porges noted last week that sales of Kyprolis could soar to $2 billion to $3 billion with expanded approvals, the news wire reported. That makes the $276 million upfront and $539 million in milestones to acquire Proteolix seem like a bargain. And Coles clearly sees an opportunity to build on this dealmaking track record.

- see the Dow Jones article

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