Amgen is close to buying Onyx Pharmaceuticals $125 a share, or more than $10 billion, in a deal that is expected to be announced as soon as Monday, two people familiar with the matter said Saturday.
A deal, which is still being finalized and would require board approval from both companies, would represent the fifth-largest biotechnology deal in history. The proposed takeover would value Onyx at 13 times the company's expected revenues for next year, one of the richest valuations in biotech takeovers, one of the people said.
The people asked not to be identified because the matter isn't public. Representatives for Amgen (AMGN) and Onyx (ONXX) couldn't be immediately reached for comment. The acquisition of Onyx would give Amgen full rights to Kyprolis, the new multiple myeloma drug that analysts expect to reach annual peak sales in excess of $2 billion.
Amgen would also gain a revenue stream from the liver and kidney cancer drug Nexavar that Onyx shares with Bayer, as well as royalty payments on Bayer's much newer colon cancer drug Stivarga and potential future royalties on an experimental breast cancer drug being developed by Pfizer (PFE).
A deal in the $10 billion range would be Amgen's biggest since its $16 billion acquisition of Immunex in 2001 that gave it the rheumatoid arthritis drug, Enbrel, which is one of Amgen's most important, biggest-selling products.
It would be by far the biggest deal under CEO Bob Bradway, who took over the top spot in May 2012. He has done a handful of much smaller deals, the biggest to date being a $1.16 billion acquisition of Micromet.
Focus on Oncology
Onyx shares closed Friday at $116.96. Amgen offered to pay $120 a share for the company in June but Onyx said that bid significantly undervalued the company and put itself up for sale.
An Onyx deal would also give Amgen a much higher profile in oncology. Several of its current drugs offer supportive care for cancer patients, such as to treat anemia or decreases in white blood cells caused by chemotherapy.
Another of its newer medicines, Xgeva, helps prevent fractures in patients whose cancers have spread to the bone. Its one product that treats cancer, the colon cancer drug Vectibix, has largely been a disappointment.
Analysts are expecting Onyx revenue to reach $878 million in 2014, according to Thomson Reuters I/B/E/S.
Geoffrey Porges, long-time biotech analyst for Sanford Bernstein, projected that an Onyx acquisition would boost Amgen revenue by 5 percent to 6 percent near term, rising to 20 percent by 2021. He sees Amgen earnings per share declining by 3 percent to 4 percent in 2014 with the purchase of Onyx, but increasing by 8 percent in 2016 and growing to an increase of 22 percent in 2019.
Two of Amgen's biggest products -- the anemia drugs Aranesp and Epogen -- have been in decline for years, while others are fairly mature at this point.
The New York Times first reported Saturday that the two companies were near a deal.