In November 2011 Prohost posted an article titled “Deal or no deal, time for a payoff” (click HERE to read the article). All that prophesized in that article about Onyx’ (ONXX) drugs and prospects has materialized and the final item, a takeover, seems to be on the verge of happening.
On Friday June 29, after market hours, news spread that the Canadian newspaper Financial Post announced that Amgen has offered to buy Onyx for $120 per share in cash. ONXX soared about 30 percent after the market closed.
The newspaper said that Amgen had sent material to Onyx in which it would propose a cash acquisition worth about $10 billion and requested due diligence and a document review period.
The Financial Post said Amgen forwarded its documents to Onyx about two weeks ago. Amgen had sales of $17.3 billion in 2012, while Onyx brought in revenue of $362 million.
According to the Financial Post, the documents sent to Onyx said that Amgen was prepared to "move quickly to negotiate and execute a combination with you" and that the proposal did not have financing conditions on it.
"Although we have reviewed Onyx extensively, our review has been limited to publicly available information. We would propose a focused, confirmatory due diligence and document review period," the documents said, according to the Financial Post.
In our article of November 2011, we noted that following a blind rule of thumb; investors had caused a selloff in the stock, which led to ONXX’ plummeting from a 52 weeks high of over $36, to around $20 following Onyx’ takeover of the firm Proteolix to get to its multiple melanoma second-generation drug Carfilzomib. We expressed our disappointment from the stupid rule of thumb that causes automatic biotech stock selling at the sight of paying any money, regardless of the advantages of what the money has been spent on. We predicted the drug will be approved and will prove it is a blockbuster. The drug was in fact approved and sold since under the trade name Kyprolis®. It is generating over $360 million/year.
The odds are in favor of Amgen’s takeover of Onyx. This statement is based on the fact that that Onyx has expressed its intention to be acquired by a good biotech firm, or pharmaceutical Company. That’s exactly what made us keep the stock and advocate buying it on weaknesses in case it happens in spite of the fact that the stock soared from $35.90 the stock price in March 18, 2011, the day Prohost picked it and added it to its #1 portfolio (see Prohost tables) to over $96 in May 2013.
Following Friday news, the stock soared to $109.01 UP $22 after market hours.
It is up to our subscribers who bought the stock at $35.90 or over this price later on to make their own decision of whether to keep the stock or sell it at this price, or around it.
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