Onyx Pharmaceuticals Soars after FDA Advisory Panel Vote

Thursday, shares of Onyx Pharmaceuticals

closed near $63.78, up around 43.1% for the session. Preceding this share price rise, an FDA advisory panel unanimously backed the company's drug for treating multiple myeloma in people who have tried at least two other medicines. The vote was 11-0 with one abstention. The positive FDA panel decision makes it likely that the drug will be approved by the FDA on July 27 at the company's Prescription Drug User Fee Act (PDUFA) date for completion of FDA accelerated review. Including Thursday's move, Onyx Pharmaceuticals gained more than 45% year to date and nearly 78% over the last 52-weeks. The company's multiple myeloma drug, known as carfilzomib, will be marketed under the brand name Kyprolis. The FDA panel decision has triggered a number of ratings changes across Wall Street. Analysts at Brean Murray Carret & Co. upgraded the stock from Hold to Buy with a $60.00 price target. In a note, these analysts said, in their view, FDA approval is "clearly coming." According to the equity research firm, "the overwhelming viewpoint is that the benefit of Kyprolis outweighs the potential risks, especially given the lack of alternatives for refractory MM patients" The FDA panel had to assess Kyprolis' potential for cardiovascular toxicity, among other potential safety concerns. Brean Murray Carret & Co. also said Onyx has been preparing to launch the drug for some time and only needs to hire a sales force. The pharmaceutical company could begin this hiring prior to the PDUFA date. Deutsche Bank analysts launched coverage on Onyx in the wake of the positive FDA panel decision and declared that Kyprolis is likely going to be a blockbuster drug in the treatment of multiple myeloma. The bank estimates that the drug's peak sales could be $1.5 billion to $2 billion. In addition, the bank attached a $58.00 price target on the healthcare stock. In a note, Deutsche Bank analysts said, "we view Onyx as an attractive M&A asset." Deutsche Bank said it thinks that Onyx could now command between $68.00 and $76.00 in a deal. Also, the bank notes that "large biotech or pharma with global oncology sales force could extract launch synergies." The bank's analysts added that they "see several potential acquirers." Analysts at Goldman Sachs, who already had a Buy rating on the stock, raised their price target and estimates in the wake of the positive news for Onyx. The bank's price target for Onyx's stock was raised from $52.00 to $63.00. In a note, Goldman said that it now sees a potential M&A deal for Onyx as high as $91.00. Goldman now projects a 95% chance that Kyprolis will be approved, versus a previous estimate of 80%. Driven by sales of the new drug, Goldman is projecting that ONXX will become profitable in 2015 with non-GAAP EPS of $1.42. Other brokers that raised price targets on Onyx include JP Morgan, Bank of America, Merrill Lynch, and Jefferies & Co. The analysts at JP Morgan noted "blockbuster sales potential" for the drug and raised their price target from $48.00 to $66.00. In light of the overwhelmingly positive panel vote, Wall Street analysts are now modeling a Kyprolis launch for late 2012 versus previous expectations of a 2014 launch. Bank of America reiterated its Buy rating and raised its price target from $57.00 to $62.00 while Jefferies stayed at Hold but bumped its price target from $45.00 to $55.00. Thursday, Onyx was already trading above many Wall Street analysts' revised price targets. This is likely because of a potential M&A premium that investors are pricing into the stock. The decision from the FDA panel and the fast approaching PDUFA date on July 27 means that Onyx is now in play and could potentially be acquired. Going forward, major catalysts for Onyx's stock price are likely to be the key PDUFA decision, buyout rumors, and updates on the potential launch of Kyprolis. The market has likely already priced in definite approval of Kyprolis on July 27. Considering these high expectations, Onyx's share price might decline sharply if the drug is approved later than anticipated or not approved at all.