use some of that stock market wealth to acquire a small cancer drugmaker that needs its expertise to get to the next level in development, regulatory affairs, sales and marketing. By buying another Proteolix, and doing something good with it, there’s no reason to think Onyx couldn’t be worth $200 a share, have a staff with 2,000 people or more, and have products that help more tens of thousands of more patients.
This isn’t to say that there’s anything dead wrong, or boneheaded, about an Amgen acquisition. Amgen has a history of selling products that are important for cancer supportive care, but it has never made much headway in selling direct anti-tumor medicines like Onyx’s. In the hands of the sales and marketing team at Amgen, or another big drugmaker, you can be sure that Onyx’s cancer drugs would sell quite well and do a lot of good for patients. No problem there.
But you can also be sure of a few other things if Onyx is sold. Shareholders will make money. Jobs will be lost at Onyx, as the acquirer will seek to cut expenses to boost profits. The San Francisco Bay Area will lose one of its brightest biotech stars, a company with anchor-tenant potential. Various service providers—lawyers, accountants, financial advisors—will make a bundle in fees. Other biotech companies will be motivated to sit down with their bankers, and consider whether they, too, can strike a big M&A deal.
There are plenty of examples where acquisitions make good strategic sense. Little companies, like Proteolix, sometimes need the help of a bigger player to make the most of an asset. Pharmasset, the last biotech company to draw megabucks acquisition interest, would have been nuts to turn down an $11 billion takeover offer. It had zero products on the market at the time, and was several years away from getting its first.
Onyx isn’t in that kind of situation. It has what it takes to stand on its own two feet. It’s one of these mid-sized biotech companies that’s just gotten into a groove. It’s like a band that’s making great music, but hasn’t quite gone platinum yet. I’d like to see what this band can do for a while longer before it breaks up.
