Amgen's (AMGN) Kyprolis (carfilzomib) failed to achieve its primary endpoint of improving overall survival (OS) in a 315-patient Phase 3 clinical trial (FOCUS) evaluating the safety and efficacy of the product in patients with relapsed and advanced refractory multiple myeloma compared to an active control regimen of low-dose dexamethasone (or equivalent corticosteroids) plus optional cyclophosphamide.
Despite the setback, Amgen subsidiary Onyx Pharmaceuticals (ONXX) President Pablo J. Cagnoni says, "While it is unfortunate that the FOCUS study did not meet its primary endpoint, we believe the results from the recent positive ASPIRE Phase 3 clinical trial will be sufficient to support regulatory submissions around the world."
Cramer says biotech is a safe haven amid the uncertainty emanating from Washington, as pipelines are strong and the sector is not sensitive to the trajectory of the overall economy — this is a "double advantage", he says.
Celldex (CLDX +5.3%) — which is part of this week's billion dollar biotech price target bump club courtesy of Leerink and Cantor — gets a glowing recommendation as Cramer calls the company "just incredible."
Other companies getting a name drop: Celgene (CELG +2.4%), Immunogen (IMGN +2%), and Onyx (ONXX).
Fitch says AMGN's leverage is going to increase significantly because of the acquisition, by at least $8B.
To pay for the deal, AMGN is taking out $8.1B of five-year loans and paying an average interest rate 104 basis points above the three-month London Interbank Offered Rate - despite the fact that it's sitting on $22B in cash.
Why? Because of a quirk in the U.S. tax system in which companies' foreign earnings are taxable in the U.S., but only once they are repatriated to the parent.
Companies sitting on large amounts of cash can cut their tax bills by keeping income offshore in lower-tax countries. As a result, American companies - like Amgen - are holding a lot of cash offshore, but cash poor at home - which in AMGN's case leads to higher leverage and lower credit ratings.
Roth Capital Partners doesn't want investors to forget that Kyprolis — the multiple myeloma drug at the center of Amgen's (AMGN) deal for Onyx (ONXX) — is a moneymaker for Ligand Pharmaceuticals (LGND +1.1%) which receives tiered royalties tied to the use of Captisol technology in the drug.
LGND gets 3% above $750M in Kyprolis sales, Roth notes, adding that "based on current Wall Street estimates ... the 3.0% level will be reached in the next 24 months at the minimum."
Kyprolis' potential will now be backed by AMGN's "juggernaut sales and marketing efforts," Roth says.
Sell-side notes on Amgen's (AMGN) deal for Onyx (ONXX) begin to roll in.
"We view the proposed acquisition as a strategic positive for AMGN," Goldman's Terence Flynn says, adding that the deal will "leverage AMGN's existing oncology infrastructure, boost [its] top and bottom line growth, and further diversify the company's revenue base."
Goldman sees EPS accretion of -2%, 10%, and 17% in FY14,15, and 16 respectively.
Jefferies sees the deal as accretive to the tune of 3%, 8%, 9%, and 6% in FY15, 16, 17, and 18 respectively.
Piper upgrades AMGN to Overweight from Neutral and hikes its price target to $140 from $120.
Amgen (AMGN) is paying $10.4B, or $9.7B excluding Onyx's (ONXX) cash, making it the fifth-largest biotechnology deal in history. The $125-a-share offer represents a 4.2% increase from Amgen's $120 bid in June. Onyx closed at $116.96 on Friday.
By buying Onyx, Amgen is gaining full rights to Kyprolis, a potential blockbuster treatment for multiple myeloma, revenue from liver and kidney cancer drug Nexavar, royalties on Bayer's colon cancer medicine Stivarga, and prospective future payments on a breast cancer drug that Pfizer is developing.
The deal comes as safety fears have hit sales of Amgen's flagship anemia drugs, Aranesp and Epogen, and ahead of a patent cliff starting in 2015 in which four of the company's five top-selling products are due to lose patent protection. (PR)
It's official: Amgen (AMGN) will acquire Onyx (ONXX) for $125/ share, putting to rest weeks of speculation about what the terms of the deal would turn out to be after a dispute over Kyprolis data reportedly put the two companies at odds over price.
The spat over access to trial data on Kyrpolis looks like it hasn't been resolved. Reports earlier this week suggested that the dispute over access to data on Kyprolis had been taken care of, with ONXX agreeing to provide the information. However, ONXX has apparently balked, saying the data pertains to sensitive patient data.
Amgen hasn't put a new offer on the table yet and is considering its next move.
Onyx Pharmaceuticals (ONXX) has reportedly provided data from the Phase III trial of its blood-cancer drug Kyprolis to Amgen (AMGN) and other potential acquirers, removing a stumbling block that had caused talks to stall.
Amgen is in advanced negotiations to buy Onyx for $9.5B and had asked for the information to better assess the medicine, which is seen as a potential blockbuster, while AstraZeneca (AZN) has also held discussions about a deal.
Onyx had been reluctant to provide the data, as the trial of Kyprolis is still ongoing.
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