Amgen shares rise following takeover of Onyx Pharmaceuticals, analysts weigh in on deal

Amgen shares rose as much as 9 percent on Monday, a day after the company confirmed a deal to buy Onyx Pharmaceuticals for $125 per share, or roughly $10.4 billion. Commenting on the transaction, Citi Investment Research analyst Yaron Werber suggested the success of the acquisition depends on Onyx's Kyprolis (carfilzomib), which won accelerated approval from the FDA for advanced multiple myeloma last year, saying "the deal will restore much needed top-line growth until the internal pipeline begins to deliver in 2015."

Piper Jaffray analyst Ian Somaiya estimates Kyprolis sales of more than $3 billion by 2025. Brean Capital's Gene Mack indicated that "given our view of the overall myeloma market and the growth we see over the next 3 to 5 years, we are not surprised by the interest in Onyx, since it is our view that both Onyx and Celgene," which markets the multiple myeloma therapies Revlimid (lenalidomide) and Pomalyst (pomalidomide), "will be the primary beneficiaries of that growth." Mack predicts Kyprolis and Onyx's experimental proteasome inhibitor oprozomib, which is currently in testing for haematologic malignancies, including multiple myeloma, could generate combined sales exceeding $4 billion.

Onyx is conducting four additional late-stage trials of Kyprolis, including testing the drug to treat multiple myeloma at earlier stages of the disease, with the new data slated to become available during the first half of 2014. Among these is the Phase III confirmatory ASPIRE trial, for which the company has an agreement with the FDA regarding a Special Protocol Assessment. The study is evaluating the efficacy of Kyprolis in combination with Revlimid and dexamethasone at improving progression-free survival, with final results expected in 2014. Onyx management has suggested that positive data from ASPIRE would be sufficient to secure European approval for Kyprolis.

As part of the Onyx acquisition, Amgen also obtains three oncology therapies, namely Nexavar (sorafenib) and Stivarga (regorafenib), which are partnered with Bayer, and palbociclib, a candidate co-developed with Pfizer that is in Phase III testing for ER+, HER2-negative advanced breast cancer. ISI Group analyst Mark Schoenebaum projected that the acquisition will increase Amgen's earnings by 5 percent in 2015, 10 percent in 2016 and 15 percent in 2017. Meanwhile, Cantor Fitzgerald analyst Mara Goldstein suggested the takeover, "coupled with other smaller deals in the sector," could increase the valuation of other drugmakers with promising therapies in late-stage development.

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