White Paper: Amgen’s $10.4bn Onyx acquisition secures long-term oncology prospects.
By Ali Al-Bazergan, Lead Analyst
30 August 2013
I am the Lead Analyst of the company analysis team at Datamonitor Healthcare, based in the London office. I focus on tra...
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- Provides Amgen with an immediate revenue stream in Kyprolis, Nexavar, and Stivarga
- Supports its drug development pipeline with oprozomib (multiple myeloma) and palbociclib (breast cancer).
- Reaffirms Amgen’s global position in the lucrative oncology space.
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On 25 August 2013, Amgen announced that the company would acquire all of the outstanding shares of Onyx for $125 per share in cash (Amgen, 2013). The $10.4bn deal will give Amgen full rights to Onyx’s Kyprolis (carfilzomib), approved in the US in 2012 as a third-line treatment for multiple myeloma with the potential of growth from European approval and earlier lines of disease. The acquisition is a positive step strategically as Amgen seeks to enhance its oncology portfolio in mind of maturing products and looming biosimilar pressures to Neulasta (pegfilgrastim) and Neupogen (filgrastim) from 2015.
The transaction becomes Amgen’s second largest deal behind its $16.6bn Immunex acquisition in 2001. The company will finance the deal through a combination of US cash and committed bank loans, expecting to deliver an attractive return on capital. However, inherent in any acquisition are the risks involved in recouping the initial capital invested. Amgen will have to continue to invest in Kyprolis’s future filings and prove the differentiation of the drug against marketed products in order to achieve profitable market penetration.
Gaining full rights to new multiple myeloma drug Kyprolis is key to acquisition agreement
The acquisition notably hinges on accretion from future Kyprolis revenues as Amgen will hope to get the drug approved in Europe and expand indications further up the treatment paradigm. Amgen’s chief executive officer Robert Bradway noted that confidence in Kyprolis’s efficacy and safety profile has been gained through the exhaustive due diligence process and this was reflected in the price the company put forward in the transaction.
Amgen has sought the unique opportunity to leverage its experience and infrastructure in the oncology market and maximize Kyprolis’s potential, a product at an early and promising stage of its launch. Kyprolis has brought Onyx $125m in sales during the first half of this year, and is forecast to reach blockbuster status once approved and launched in Europe (after 2015).
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