THOUSAND OAKS, Calif. ( TheStreet) -- Investors appear to like Amgen's (AMGN - Get Report) decision to buy Onyx Pharmaceuticals (ONXX) for $10 billion. Amgen shares are up 9% to $114.65 in early Monday trading.
If you go back to June 28, when news of Amgen's interest in acquiring Onyx was first broken reported, the stock is up 16%.
By acquiring Onyx, Amgen earns back much-needed biotech street cred, which has been lost in recent years. Instead of growing earnings modestly through financial hocus-pocus -- share buybacks and expense cutting -- the addition of Onyx's multiple myeloma drug Kyrpolis will pump up Amgen's revenue growth, which will, of course, translate into higher earnings.
Risks? Absolutely. Right now, Kyprolis is only approved in the U.S. for multiple myeloma patients no longer responding to any other treatments. Onyx is conducting four additional clinical trials of Kyprolis aimed at getting the drug approved in Europe and demonstrating benefit for earlier-stage multiple myeloma patients. Much of these new clinical data will begin to roll in during the first half of 2014. Today's positive verdict on the Amgen-Onyx deal will sour if Kyproplis is unable to gain European approval or make inroads into the more commercially lucrative, early-stage multiple myeloma treatment markets. -- Reported by Adam Feuerstein in Boston. Follow @AdamFeuerstein
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