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So to Biotech stocks are getting a big bump today Biotech firm Amgen closed -- ten billion dollar plus deal with smaller firm Onyx Pharmaceuticals.
But is investing in Biotech firms worth the risk -- -- take a look at the front page -- marketplace stay out of the journal.
But people were expecting this but did -- pay too much and are they taking a gamble others say they have to do this.
Joining us now Steve silver Biotech analyst at S and IQ and I'll get right into why Amgen needed to do this some of their pharmaceutical drugs some of their stuff that deals with cancer.
Is maturing that would lose patents and onyx has a drug that is already approved but not as widely years.
If necessary you would think.
For the price and -- is paying isn't there a risk Amgen and the FDA down the roads as you can expand its use.
Well sure I think there's -- Leo is that risk in.
As you mentioned onyx is -- drug control -- that got approval FDA.
From the FDA last year four of multiple myeloma which is a form of blood cancer but only in those patients that they had exhausted treat all other approved.
So onyx is really pushing forward to move -- control -- to an earlier stage of use in multi mile on the south.
While early -- to do that has looked good so far.
There's always that risk that something might come up Indiana phase three studies that are ongoing.
That might affect the price that engine -- agreed to pay.
-- so I think that's the risk that.
Takes place in investing end -- firing Biotech companies.
We we would assume that -- did some kind of due diligence in which they would be looking for other.
Drugs in the pipeline that would add value to the purchase of what else does -- have besides this cancer drug.
Sure -- on X has a co promotion rights to a cancer drug that's been on the market for several years now cold necks of art which is in partnership with Bayer pharmaceuticals.
And that drug is approved for liver and kidney cancers.
It's a little bit more the mature drug although we think that that drug could get approval next year for use in thyroid cancer so there is growth opportunity there.
In addition products also has a 20% royalty stake to another cancer drug got a sold by Barrick colts to -- got.
Which approved in -- cancer uses.
And also Pfizer is now in phase three study in a drug for up breast cancer that honest would have an 8% royalty you -- them in the future.
So that drug is not expected to reach the market for several years still but it didn't receive FDA breakthrough therapy -- designation earlier this year.
Which we think boost its chances to get on the market and when it does on the onyx wood and now engine would -- a benefit from that it.
Did did investors missed their opportunity I mean there's been a discussion of this merger for over three months and even today and and shares hit 52 week 960 bucks if but a pullback -- I -- that you have a price target what that you have a 128 dollars how long would it take to get.
There -- I think that if he had data cuts coming in over the next 66 to twelve months on the control -- comes out positively.
I think ending could get their short order obviously that comes with the risks.
But I was a little surprised as well that dumb Amgen was the winning bidder here I -- -- expect to some other interest stuff from other pharmaceutical firms given.
The potential of our control its -- longer term.
Well and I've been reading that some of investors and holders of onyx stock think that the prices to look -- -- -- but I think it's too low look at that signal that perhaps there's not as much in the pipeline is Amgen would like.
No -- you know what I think the -- at the end of the day I think the main driver in terms of the lower price.
Was this gap between what is known today in terms of control -- his -- clinical program vs its potential.
I think as I mentioned earlier in phase three study a lot can go wrong as.
-- was trying to move to post earlier lines of treatment.
So I think that the two firms had a disagreement in terms of valuation based on what is currently known today so I think that was the driving force between -- getting the price that it paid.
-- though where it was thought a few weeks ago that -- might fetch.
All right Steve silver Biotech analyst at S&P capital like you thank you very much for helping us understand better the reasons and I then decided to make this move sounds like they got a good deal.
The closing bell.
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