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Onyx Soars 51% After Rejecting Amgen, But Open To New Bids

Onyx Pharmaceuticals (ONXX) surged 51% Monday after the biotech rejected an Amgen takeover bid but said it's open to other offers.

The Financial Post reported late Friday that Amgen (AMGN) had offered $120 a share for Onyx, which closed Friday near 87. Onyx confirmed this in a press release Sunday, saying the price was too low but that its board decided to entertain other bids.

This set off a round of speculation on Wall Street about other buyers, since a number of companies have reason to be interested in Onyx's cancer-focused pipeline. One of its two approved products, Kyprolis, treats multiple myeloma, the same disease that brought Celgene (CELG) its fortune with its drug Revlimid.

Onyx is also in partnership with Bayer (BAYRY) to market its other product, Nexavar, which was approved back in 2005 for kidney cancer and which the companies said Monday they'd filed to get approved for thyroid cancer. Onyx also draws royalties from Bayer's colorectal cancer drug Stivarga.

Onyx also has a royalty deal with Pfizer (PFE) for breast-cancer candidate PD 991, whose phase-two results generated some excitement in the industry last December. ISI Group analyst Mark Schoenebaum estimates the market opportunity for the drug is at least $2 billion.

Onyx has lost money for several quarters and is expected to spill more red ink through 2013. But Wall Street predicts earnings per share of 56 cents next year.

Onyx shares gapped higher to a close of 130.51 after trading in a relatively tight range. That's far above the previous all-time high of 101.57 on April 30.

Amgen itself isn't out of the running yet if it chooses to raise its offer. Schoenebaum wrote in an email Friday that Amgen has a large cancer franchise but no direct anti-tumor agents, so Onyx's products would be a nice strategic fit.

Amgen shares rose about 2% early but closed down 1% to 97.49.

Several other biotech stocks rose on hopes that they might also be buyout targets, according to RBC Capital Markets analyst Michael Yee. Ariad (ARIA) jumped 11.7% to close at 19.54; its recently launched leukemia drug Iclusig is tracking above expectations, Yee wrote in a note. Pharmacyclics (PCYC), which has both a leukemia drug and a multiple-myeloma drug in the works, rose 7.5% to close at 85.39. BioMarin (BMRN), with four approved drugs for rare genetic diseases, climbed 6.6% to 59.44.