Onyx Expects Takeover Interest

Onyx Pharmaceuticals Inc. (ONXX) is expecting takeover interest from roughly five parties including Amgen Inc. (AMGN) and Pfizer Inc. (PFE), according to people familiar with the matter, as the cancer-drug developer seeks to drum up demand in an acquisition that could be valued at more than $10 billion.

Onyx and its advisers asked interested parties for initial offers by this past Friday, though bids are expected to come in after that date too, according to the people. One person said bidders who put in offers that are high enough are expected to get access to Onyx's confidential information to help them formulate binding offers.

It isn't clear if early interest will evolve into firm bids; expressing interest costs a company little and enables it to look at a rival's confidential information.

Onyx late last month put itself up for sale after rejecting an unsolicited acquisition offer from Amgen that valued the company at $120 a share, or some $8.7 billion based on the number of shares outstanding. Onyx's principle attraction is its blood-cancer treatment Kyprolis, which could be appealing to pharmaceutical and biotechnology companies looking for access to new cancer medications.

Amgen is still eager to buy Onyx, according to people familiar with the matter. It's unclear how much competition it ultimately will have. One factor that could discourage competing offers is the current share price of Onyx, which has surged to more than $130 on expectations the company will be sold at a price well above Amgen's opening bid. Companies often insist on a premium to their current share price in a sale.

In addition, a number of large banks that have been seeking to advise or fund Onyx or one of its suitors still don't appear to have landed roles. That could suggest a lack of broad interest in the company at this price, or it simply could be that suitors are proceeding without banks at this point.

Indeed, there has been a scramble among unattached banks to get added to Amgen's roster--a sign many believe the California biotech is the horse to beat. One large player, Bank of America Corp. (BAC), did land a role--arranging funding for an Amgen offer, people familiar with the matter say.

Two companies that have been subject to significant speculation around a possible deal are Bayer AG (BAYN.XE, BAYRY) and Pfizer, because of existing ties they have with the South San Francisco, Calif., company. Onyx has a collaboration and royalty licensing agreement with Bayer that allows the German drug company to share in the profits of two cancer drugs. It also has rights to an experimental cancer treatment being developed by Pfizer.

Pfizer is considering its options with regard to Onyx, according to people familiar with the matter.

Bayer is unlikely to participate in the auction, in part because it finds the price too rich, according to a person familiar with the company's thinking. Another possible suitor that had considered an offer for Onyx but already has decided not to proceed is Eli Lilly & Co. (LLY), some people familiar with the matter said.

Onyx shares fell slightly to $130.42 Tuesday, giving the company a market value of $9.5 billion. Amgen's initial bid valued Onyx about 38% more than the company's last closing price before it was disclosed.

Write to Dana Cimilluca at [e-mail], Jonathan D. Rockoff at [e-mail] and Dana Mattioli at [e-mail]

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