This might explain the recent decline. The CEO's selling all those shares didn't help either--but I know that I am in the minority on that.
Onyx Pharmaceuticals (ONXX) Is Trading at Pre-Kyprolis Approval Levels; Is It Time to Buy? 3:29 PM ET, 08/16/2012 - Street Insider
Remember when Onyx Pharmaceuticals (NASDAQ: ONXX) received FDA approval for Kyprolis? Well the stock sure doesn't.
Shares of ONXX are now back to pre-Kyprolis approval levels and analyst at Deutsche Bank said that's just not right. The firm said the downside aciton in the stock is a result of fear of a potential capital raise have shifted buyers to sideline.
The fear has been an overhang on the stock since the second quarter earnings call and may have been heightened during recent non-deal roadshow to the east coast, according to the firm.
With $590 million in cash, management continues to believe the company has a strong financial position, although they will not rule out a potential capital raise. Investor see non-denial by management as a sign of an upcoming raise.
Although there is significnat significant support for Onyx, with a looming raise investors are not rushing to buy.
With shares down 15 percent from the highs, however, Deutsche Bank said "raise seems to be baked in at these levels."
If the company does do a capital raise, it will likely be a typically equity raise. However, looking at other deals in the sector there has been a trend toward opting for debt due to low interest rates.
The firm si maintain their Buy rating and $105 price target on ONXX, saying they believe "fundamentals remain strong & see Kyprolis beating Street expectations." However, we believe near-term performance may be sluggish due to capital raise overhang," they add.
For an analyst ratings summary and ratings history on Onyx Pharmaceuticals click here. For more ratings news on Onyx Pharmaceuticals click here.
Shares of Onyx Pharmaceuticals are down 3.8 percent today to $67.97.
I think it is amusing that because Coles refused to rule out an issuance of shares that many people sold off ONXX to drop the price. First, it would be wrong for Coles to rule it out. Second, the chances of that are low. Third, even if one occurred, it would be for the purposes of rapidly ramping up the sales force to sell Kyprolis.