Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Amgen and Onyx: Half a Billion Dollars' Worth of Drama

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

A finale has at last arrived for the biotech drama of summer 2013. Amgen (NASDAQ: AMGN  ) announced yesterday that it will buy Onyx Pharmaceuticals (UNKNOWN: ONXX.DL  ) for $10.4 billion, or $125 per share. Eight weeks ago, the bigger biotech offered around $10 billion, or $120 per share, for Onyx. That's roughly half a billion dollars worth of drama, but it was a lot of fun to watch.

A riveting plot line
It didn't take long after the news first broke at the end of June about Amgen's initial overture for Onyx to say "no" to the deal. Onyx wanted to sell, but Amgen's price "significantly undervalued" the company. At least, that's what Onyx officials said then.

Speculation began almost immediately as to how high Onyx's price tag would ultimately go -- and which big company would close the deal. As for the price, Geoffrey Porges with investment firm Sanford C. Bernstein guessed that Onyx would go for $150 per share but said that $180 per share was in the realm of possibility. Deutsche Bank analyst  Robyn Karnauskas thought that the sale price would be around $148 per share.

Quite a few companies were seen as potential acquirers. Reports floated that Pfizer (NYSE: PFE  ) was interested. That made sense, considering that there was already a connection between the two companies. Pfizer received Breakthrough Therapy Designation from the Food and Drug Administration in April on a breast cancer drug that it licensed from Onyx.

Novartis (NYSE: NVS  ) also was seen as a serious contender. The thought was that Onyx would be a good fit with the Swiss drugmaker's cancer drug lineup. Of course, that would be true of several other big pharmaceutical companies as well.

Even the Securities and Exchange Commission became involved in the drama along the way. During the week following Amgen's initial offer, the SEC froze the assets of what it called "suspicious foreign traders" who appeared to be engaged in insider trading of call options on Onyx stock.

More recently, as Amgen expressed renewed interest in the deal, Onyx again threw a twist into the plot by hesitating to reveal data from an ongoing clinical study of blood-cancer drug Kyprolis. The issue obviously was resolved, but it could have cost Onyx. Amgen had been reportedly offering $130 per share prior to the snag.

Two thumbs up?
Now that the drama has been seen and the credits are rolling, what rating does the Amgen/Onyx deal deserve? I'd give it two thumbs up.

Amgen gets a boost to its product lineup that will soon face some challenges. Teva Pharmaceuticals (NYSE: TEVA  ) is scheduled to begin marketing a biosimilar version of Neulasta in the U.S. this November. The Israel-based company already sells a biosimilar that competes against Neupogen in Europe.

Onyx makes for a good fit for Amgen's oncology business, also. Its previous products focused more on related issues from cancer rather than treating cancer directly. With its pipeline and now Onyx, however, Amgen is clearly moving in the direction of tackling cancer head-on.

As for Onyx, its shareholders receive huge gains. I'm sure many were hoping that the price tag would have been higher, but $125 per share isn't bad. Remember the old saying: A bird in the hand is worth two in the bush. There's no guarantee that any of the other companies that were rumored to be interested would have paid any more than Amgen did.

As I said earlier, this has been a fun drama to watch. Now that it's over, I'm ready for the sequel.

While the world of biotech generates plenty of excitement, the boring world of dividends can steadily make you rich. Over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 26, 2013, at 11:43 AM, amercier88 wrote:

    Hi Keith,

    I hope you’re well

    I’m getting in touch from Gorkana, a London-based media intelligence firm in New York. We track news and moves in the media.

    A PR client of mine in New York was hoping to get in touch with you about your writing in Feel free to email me at and we can discuss this more.



Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2609670, ~/Articles/ArticleHandler.aspx, 9/25/2016 10:01:47 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
AMGN $174.80 Down -0.82 -0.47%
Amgen CAPS Rating: ****
ONXX.DL $0.00 Down +0.00 +0.00%
Onyx Pharmaceutica… CAPS Rating: **
NVS $81.48 Down -0.55 -0.67%
Novartis CAPS Rating: ****
PFE $34.26 Up +0.11 +0.32%
Pfizer CAPS Rating: ****
TEVA $51.47 Up +0.24 +0.47%
Teva Pharmaceutica… CAPS Rating: ****