Amgen Inc stepped up to reach a deal to buy cancer drug maker Onyx Pharmaceuticals Inc for about $10.4 billion on Sunday, as it moves to restock its product pipeline in response to declining sales of its flagship anemia drugs.
The acquisition which ends a two-month-long auction of Onyx represents the fifth-largest biotechnology deal in history. It gives Amgen full rights to Kyprolis, the new multiple myeloma drug that analysts expect to reach annual peak sales in excess of $2 billion.
The deal would value Onyx at $125 a share in cash, the people said. One of them cautioned that the talks could still fall apart before getting to the finish line. A possible deal would be 4.2% increase from the $120 a share it offered in June. Onyx said that bid significantly undervalued the company and put itself up for sale.
The deal would be the latest involving cancer treatments, an area brought on focus of the drug industrys deal-making. Scientific advances have paved the way for developing new treatments to once problematic conditions, and drug makers have been able to charge high prices for the therapies that receive approval $10,000 a month or more for some drugs.
Discussions between Amgen and Onyx were unsuccessful earlier this month after Amgen sought access to data from Onyxs ongoing clinical trials, people familiar with the matter told Reuters previously. A source familiar with the matter on Sunday said that Amgen believed it had done extensive due diligence and was comfortable with the purchase.
The Onyx deal is Amgens biggest since its $16 billion acquisition of Immunex in 2001 which gave it the rheumatoid arthritis drug Enbrel, now one of Amgens best selling products. Large pharmaceutical companies have increasingly been looking to acquire smaller biotech firms to gain access to new drugs, as they try to boost sales and research of new drugs.
The Onyx deal is expected to give Amgen a boost in expertise in oncology department. Several of its current drugs offer supportive care for cancer patients, such as treating anemia or decreases in white blood cells caused by chemotherapy.
Amgen and Onyx retreated by 0.6% and 0.5% on Friday before the news of acquisition. Its expected both companies to advance in todays US trading session.