Onyx deal expected to give Amgen a big boost

By Susan Kelly

Mon Aug 26, 2013 1:19pm EDT

n">(Reuters) - Investors reacted favorably on Monday to Amgen Inc's $10.4 billion purchase of Onyx Pharmaceuticals Inc, which gives the world's largest biotech company full rights to a blood cancer drug with multibillion-dollar sales potential.

Amgen shares rose 9 percent in midday trade on news of the acquisition, the biggest biotech deal since Gilead Sciences Inc's $11 billion purchase of Pharmasset in 2012.

The main prize in the acquisition is Onyx's blood cancer drug Kyprolis.

Piper Jaffray analyst Ian Somaiya upgraded Amgen shares to "overweight" from "neutral" and raised his price target on the stock to $140 from $120, saying Kyprolis could generate sales of more than $3 billion by 2025.

Brean Capital analyst Gene Mack said Kyprolis and Oprozomib, another blood cancer drug in development at Onyx, could produce combined sales of more than $4 billion.

Kyprolis is used to treat multiple myeloma, the second most commonly diagnosed blood cancer. The disease attacks antibody-producing plasma cells, which are derived from a type of white blood cell. More than 20,000 Americans are expected to be diagnosed with multiple myeloma this year, according to the Leukemia and Lymphoma Society.

Kyprolis competes with the Celgene Corp drug Revlimid. Celgene also has a new myeloma treatment, Pomalyst.

"Given our view of the overall myeloma market and the growth we see over the next 3-5 years, we are not surprised by the interest in Onyx since it is our view that both Onyx and Celgene will be the primary beneficiaries of that growth," Mack said in a note to clients.

Kyprolis has been on the U.S. market for about a year and its sales have been climbing steadily, reaching $61 million in the second quarter. Onyx previously said plans were in place for a Kyprolis launch in Europe in the second half of 2014.

Onyx also sells Nexavar, a treatment for liver and kidney cancer.

Amgen has been looking for new ways to boost its product pipeline as sales of its flagship anemia drugs Aranesp and Epogen have been in decline for years because of usage restrictions and safety concerns.

On a conference call with analysts on Monday, Amgen executives said they plan to file the tender offer for Onyx this week, with the deal expected to close as early as the week of September 30.

Amgen Chief Executive Officer Bob Bradway, who took the helm of the Thousand Oaks, California-based company just over a year ago, has been able to keep investors happy with dividend increases and share repurchases. On the conference call, he said Amgen remained committed to raising its dividend over time after it completes the Onyx acquisition. He also said investors should not expect any significant share repurchases in 2014 or 2015.

In the acquisition, announced on Sunday, Amgen will pay $125 a share for Onyx, a 4.2 percent increase from the $120 a share it offered in June.

Shares of Amgen rose 9 percent to $115.05 in midday trading, while Onyx shares climbed 5.7 percent to $123.65.

(Reporting by Susan Kelly in Chicago; Editing by John Wallace)

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Onyx deal expected to give Amgen a big boost

By Susan Kelly

Mon Aug 26, 2013 1:19pm EDT

n">(Reuters) - Investors reacted favorably on Monday to Amgen Inc's $10.4 billion purchase of Onyx Pharmaceuticals Inc, which gives the world's largest biotech company full rights to a blood cancer drug with multibillion-dollar sales potential.

Amgen shares rose 9 percent in midday trade on news of the acquisition, the biggest biotech deal since Gilead Sciences Inc's $11 billion purchase of Pharmasset in 2012.

The main prize in the acquisition is Onyx's blood cancer drug Kyprolis.

Piper Jaffray analyst Ian Somaiya upgraded Amgen shares to "overweight" from "neutral" and raised his price target on the stock to $140 from $120, saying Kyprolis could generate sales of more than $3 billion by 2025.

Brean Capital analyst Gene Mack said Kyprolis and Oprozomib, another blood cancer drug in development at Onyx, could produce combined sales of more than $4 billion.

Kyprolis is used to treat multiple myeloma, the second most commonly diagnosed blood cancer. The disease attacks antibody-producing plasma cells, which are derived from a type of white blood cell. More than 20,000 Americans are expected to be diagnosed with multiple myeloma this year, according to the Leukemia and Lymphoma Society.

Kyprolis competes with the Celgene Corp drug Revlimid. Celgene also has a new myeloma treatment, Pomalyst.

"Given our view of the overall myeloma market and the growth we see over the next 3-5 years, we are not surprised by the interest in Onyx since it is our view that both Onyx and Celgene will be the primary beneficiaries of that growth," Mack said in a note to clients.

Kyprolis has been on the U.S. market for about a year and its sales have been climbing steadily, reaching $61 million in the second quarter. Onyx previously said plans were in place for a Kyprolis launch in Europe in the second half of 2014.

Onyx also sells Nexavar, a treatment for liver and kidney cancer.

Amgen has been looking for new ways to boost its product pipeline as sales of its flagship anemia drugs Aranesp and Epogen have been in decline for years because of usage restrictions and safety concerns.

On a conference call with analysts on Monday, Amgen executives said they plan to file the tender offer for Onyx this week, with the deal expected to close as early as the week of September 30.

Amgen Chief Executive Officer Bob Bradway, who took the helm of the Thousand Oaks, California-based company just over a year ago, has been able to keep investors happy with dividend increases and share repurchases. On the conference call, he said Amgen remained committed to raising its dividend over time after it completes the Onyx acquisition. He also said investors should not expect any significant share repurchases in 2014 or 2015.

In the acquisition, announced on Sunday, Amgen will pay $125 a share for Onyx, a 4.2 percent increase from the $120 a share it offered in June.

Shares of Amgen rose 9 percent to $115.05 in midday trading, while Onyx shares climbed 5.7 percent to $123.65.

(Reporting by Susan Kelly in Chicago; Editing by John Wallace)

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US Economy Adds Fewer Jobs Than Expected

The US added 162,000 jobs in July - the fewest since March - but the gains cut the unemployment rate to a four-and-a-half year low.

The Labour Department said the rate fell from 7.6% in June to 7.4% in July - the lowest level since December 2008.

But that was one of the few good signs in an otherwise lacklustre report.

The economy added 26,000 fewer jobs in May and June than previously estimated while Americans worked fewer hours and their pay dipped.

The figures suggest weak economic growth may be making businesses cautious about hiring.

Reaction to the jobs report on financial markets was slightly negative. Stock index futures gave up early gains and were little changed shortly after the report came out.

The Federal Reserve will pay particularly close attention to the employment data as it decides whether to scale back its $85bn monthly bond purchases later this year. 

The job gains were mostly in lower-paying industries, such as retail, hotels and restaurants.

But some positions were added in better-paying areas. Manufacturing added 6,000 jobs driven by strong gains at auto-plants - the first jobs at factories since February. 

Professional services such as finance, accounting and information technology also increased.

Economic growth remains sluggish. The economy grew at a subpar 1.7% rate in the quarter between April and June, the government said.

While that was an improvement over the previous two quarters, it's still far too weak to rapidly lower unemployment.

Recent data suggest that the economy could strengthen in the second half of the year.

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View the original article here

US Economy Adds Fewer Jobs Than Expected

The US added 162,000 jobs in July - the fewest since March - but the gains cut the unemployment rate to a four-and-a-half year low.

The Labour Department said the rate fell from 7.6% in June to 7.4% in July - the lowest level since December 2008.

But that was one of the few good signs in an otherwise lacklustre report.

The economy added 26,000 fewer jobs in May and June than previously estimated while Americans worked fewer hours and their pay dipped.

The figures suggest weak economic growth may be making businesses cautious about hiring.

Reaction to the jobs report on financial markets was slightly negative. Stock index futures gave up early gains and were little changed shortly after the report came out.

The Federal Reserve will pay particularly close attention to the employment data as it decides whether to scale back its $85bn monthly bond purchases later this year. 

The job gains were mostly in lower-paying industries, such as retail, hotels and restaurants.

But some positions were added in better-paying areas. Manufacturing added 6,000 jobs driven by strong gains at auto-plants - the first jobs at factories since February. 

Professional services such as finance, accounting and information technology also increased.

Economic growth remains sluggish. The economy grew at a subpar 1.7% rate in the quarter between April and June, the government said.

While that was an improvement over the previous two quarters, it's still far too weak to rapidly lower unemployment.

Recent data suggest that the economy could strengthen in the second half of the year.

(function(d){ var js, ref = d.getElementsByTagName('script')[0]; js = d.createElement('script'); js.id = 'outbrainjs'; js.async = true; js.src = "//widgets.outbrain.com/outbrain.js"; ref.parentNode.insertBefore(js, ref); }(document));

View the original article here

US Economy Adds Fewer Jobs Than Expected

The US added 162,000 jobs in July - the fewest since March - but the gains cut the unemployment rate to a four-and-a-half year low.

The Labour Department said the rate fell from 7.6% in June to 7.4% in July - the lowest level since December 2008.

But that was one of the few good signs in an otherwise lacklustre report.

The economy added 26,000 fewer jobs in May and June than previously estimated while Americans worked fewer hours and their pay dipped.

The figures suggest weak economic growth may be making businesses cautious about hiring.

Reaction to the jobs report on financial markets was slightly negative. Stock index futures gave up early gains and were little changed shortly after the report came out.

The Federal Reserve will pay particularly close attention to the employment data as it decides whether to scale back its $85bn monthly bond purchases later this year. 

The job gains were mostly in lower-paying industries, such as retail, hotels and restaurants.

But some positions were added in better-paying areas. Manufacturing added 6,000 jobs driven by strong gains at auto-plants - the first jobs at factories since February. 

Professional services such as finance, accounting and information technology also increased.

Economic growth remains sluggish. The economy grew at a subpar 1.7% rate in the quarter between April and June, the government said.

While that was an improvement over the previous two quarters, it's still far too weak to rapidly lower unemployment.

Recent data suggest that the economy could strengthen in the second half of the year.

(function(d){ var js, ref = d.getElementsByTagName('script')[0]; js = d.createElement('script'); js.id = 'outbrainjs'; js.async = true; js.src = "//widgets.outbrain.com/outbrain.js"; ref.parentNode.insertBefore(js, ref); }(document));

View the original article here