Despite the rumours of imminent bids for Onyx Pharmaceuticals (NASDAQ:ONXX), and hints from the company that talks are ongoing with multiple parties, the only sound generated so far by the so-called bidding war for the US biotech has been the quiet rustle of tumbleweeds.
If anything emerged from reports of Amgen’s (NASDAQ:AMGN) wish to access data from clinical trials of Kyprolis – in yesterday’s market frenzy Onyx closed down 7% – it is that there are likely no interested parties beyond Amgen. A bid above the $120 per share that Onyx wants is a major sticking point, and Kyprolis’s phase III Focus and Aspire studies will remain central to the valuation.
Kyprolis, a drug approved in the US last year for third-line multiple myeloma, is Onyx’s single biggest asset (Coles presses home Onyx’s advantage, July 1, 2013). But a big chunk of its estimated $6.6bn of NPV relies on it being marketed in the EU as well as securing broader US approval – and both of these might hinge on the phase III Focus and Aspire trials.
What had caused much of yesterday’s panic was a Bloomberg report that had been interpreted by some in the market as suggesting that an above-$120 offer from Amgen depended on Onyx unblinding the Aspire study.
In fact the report did not mention unblinding at all, instead suggesting a request for “data from a study designed for European approval”. Unblinding a trial would clearly compromise its integrity, and such a request would have been both bizarre and unprecedented.
What is more likely is that Amgen had expressed concern over Focus, an open-label study that Onyx recently said had not reached an interim endpoint and would continue to completion next year.
After all, although an interim analysis leading to trial continuation is not unusual, there is reason to suppose that Focus will fail. Comparison of Kyprolis against best supportive care and allowing patients who progress in the control arm a wide range of treatments are two reasons why this trial has been viewed as risky.
The central question thus becomes whether Aspire alone could support additional Kyprolis filings, and this should now be the most important issue for Amgen.
ISI Group’s Mark Schoenebaum believes that Aspire is a much better-designed study than Focus, and because it will accomplish much the same goal it will “almost certainly” support filing.
It is vital not only for Kyprolis to secure EU approval but also for its US label to be broadened from third-line multiple myeloma to relapsed disease in combination with Revlimid; Celgene’s (NASDAQ:CELG) Revlimid is approved for second-line use and looks likely to gain a front-line indication. Onyx has stressed that Aspire is operating under a US SPA and scientific advice from the EU.
As far as Onyx managing to squeeze out a higher bid based on Aspire, however, there is one problem: the study will not be completed until the end of this year, generating data in 2014. Any bidder would thus have either to take a bullish view of its outcome or to use the uncertainty to beat the price down.
Amgen can at least use the dearth of other interested parties to its advantage in any negotiations, although as EP Vantage has argued Onyx should feel under no pressure to sell itself.
As Sanofi (NYSE:SNY) showed in the bidding for Genzyme, there is no quibble over a future binary outcome that a few contingent value rights cannot solve.