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The Deal: Onyx Trials Cloud Amgen Deal

Stocks in this article: AMGN ONXX

NEW YORK ( The Deal) -- A Bloomberg article that ran Aug. 14 cited anonymous sources saying that Amgen's (AMGN) $10 billion, $120 per share, acquisition of Onyx Pharmaceuticals (ONXX) was hanging on whether Amgen could see results of a clinical trial for Onyx's Kyprolis.

However, the reference to the study results was ambiguous and left parties tracking the deal trying to figure out which trial the sources were alluding to and whether access to the data could truly be a deal-breaker.

Kyprolis is a key element in Onyx's valuation. It's a next-generation proteasome inhibitor that received accelerated approval in the U.S. last year as a third-line treatment for multiple myeloma, a cancer of specific blood cells. The company needs approval in the U.S. and EU to meet its revenue guidance. The Food and Drug Administration offers urgently needed drugs accelerated approval based on preliminary data. However, the drug company must continue to pursue more proof of the drug's clinical effectiveness to attain permanent, or regular, approval.

To attain that approval, and market the drug in the EU, Onyx has two major ongoing Kyprolis clinical trials: Focus and Aspire. One of these two trials is very likely what the unnamed source was referencing in the Bloomberg article. "It's very unlikely that Amgen wanted results of a trial that's incomplete," ISI Group analyst Mark Schoenebaum said Aug. 16 in a research note.

During its second-quarter sales and earnings call, Onyx said Focus had recently undergone an interim analysis and that Kyprolis hadn't met its endpoint yet. That is not a bad signal. It's simply an early look at a trial and quite often at that point a trial hasn't met its outcome goal. Final analysis for Focus is expected next year.

These trials are "blinded," meaning nobody is supposed to know which patients are in the treatment arm and which are controls. They are coded so only an independent research committee can "unblind" the data to do an interim analysis. If the data are unblinded any other way, the trial could very well not be accepted by regulators and that could delay approval.

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