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Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: Twitter: Dereklowe

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In the Pipeline

« Options And Suchlike | Main | On Conspiratorial Thinking »

August 26, 2013

Amgen Buys Onyx

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Posted by Derek

So Amgen's bid for Onyx look like it's going through, and the reaction of John Carroll at FiercePharma was to tweet "Expect big layoffs soon". He took some flak for being such a downer, but he's right, as far as I can see. Amgen isn't buying Onyx for their research staff, or any of their people at all. As that Bloomberg story linked to above has it, "Amgen to Buy Onyx for $10.4 Billion to Gain Cancer Drug".

That's Kyprolis (carfilzomib), their proteasome inhibitor, and that's all they need from Onyx, who bought the compound anyway when they acquired Proteolix a few years ago. So since I don't want to be a downer either, especially on Monday morning, I'd be interested to see if anyone can make another case. . .

Comments (19) + TrackBacks (0) | Category: Business and Markets | Cancer


1. Anonymous on August 26, 2013 7:59 AM writes...

Let's face it, investors no longer believe that the R&D model creates any return on investment, so they see that the only way to make money is to buy companies for their assets, and then cut all future R&D costs that were factored into the price.

Goodbye innovation, it was nice knowing you.

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2. will on August 26, 2013 8:23 AM writes...

how much of that $10.4B will be going to craig crews?

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3. Anonymous on August 26, 2013 8:25 AM writes...

OK, let me try to rephrase my last comment (#1) in a more positive light:

Onyx employees will soon have the chance to explore new career opportunities without any distractions, and share this experience with thousands of other people in a similar situation. :-)

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4. Jose on August 26, 2013 8:53 AM writes...

For a good time and a highly relevant scenario, google 'Lilly ICOS layoff' and see how the chips are going to fall...

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5. JosSmos on August 26, 2013 8:55 AM writes...

Better hope they had some Stock Options...

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6. Teddy Z on August 26, 2013 9:06 AM writes...

It's not being a downer, it's being a realist. There is no career in pharma, there are only a way stations between career moves. On another positive note this model is great for real estate prices in SF and Boston; why would you live anywhere else these days?

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7. annon2 on August 26, 2013 9:49 AM writes...

It's the Biotech Cycle playing out in full public display.

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8. Turkeylurkey on August 26, 2013 11:10 AM writes...

2. Ummmm....why? He didn't develop Krypolis. Didn't even really play a role in it.

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9. Wavefunction on August 26, 2013 12:02 PM writes...

#8: From the Wiki page: "Carfilzomib is derived from epoxomicin, a natural product that was shown by the laboratory of Craig Crews at Yale University to inhibit the proteasome. The Crews laboratory subsequently invented a more specific derivative of epoxomicin named YU101, which was licensed to Proteolix, Inc. Craig Crews, Raymond Deshaies from Caltech and Phil Whitcome, the former CEO of Neurogen, founded Proteolix, and along with other researchers and scientists, advanced YU101. The scientists at Proteolix invented a new, distinct compound that had potential use as a drug in humans, known as carfilzomib."

Also, carfilzomib has considerable structural similarity to YU101, Crews's compound:

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10. Big Tuna on August 26, 2013 12:05 PM writes...

@3, in HR speak:

"best of luck in your new endeavor"

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11. srp on August 26, 2013 5:48 PM writes...

The more valuable you think the compound is, the more likely there are to be layoffs. If you think $10.4B is more than Amgen's perceived value of the compound, the difference presumably is what Amgen thinks the other assets are worth.

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12. OnyxNeighbor on August 26, 2013 6:49 PM writes...

I assume most Onyx employees will be laid off w/ the exception of maybe some clinical development and sales staff, at least initiallyt? Onyx had no research left before they bought Proteolix, and that was a very small group that they've been trying to build back up in the last couple of years.
Another interesting thing to watch is what will happen to the site. Onyx is breaking ground currently for a 3rd building, but they are only about a mile away from Amgen's South San Francisco site which I believe still has some vacancy. And Onyx's first building on the SSF site was originally occupied by Exelixis (which I believe still owns it).

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13. darwinsdog on August 26, 2013 7:55 PM writes...

Well, as a rare cat who visage has blessed the annual report of BOTH companies (that's an absolutely unique clue BTW), I will say there is nothing noble about either company's culture to dissuade laying-off en masse but I will say Amgen, by virtue only of its large cash reserves, attempts (somewhat feebly) to retain scientific staff (IMNX, TLRK etc) at least for a few years and of course only referring to larger acquisitions of which I think ONYX might qualify if they are lucky (in smaller acquisitions everyone gets the axe). BUT that said the first bad quarterly report and even Amgen will look for RIFs and new sites are particularly vulnerable but it often comes as a option to either relocate or RIF. Oh, new bldgs - forget about it. Immunex was building a new research campus and had broken ground and laid foundations and uprights but that did not keep Amgen from scaling the plan back by half including the hard to watch demolition of a new medicinal chemistry building with space for 6 high field NMRs and ~100 med chem staff. Call it arrogance or laziness but Amgen will not use your screening libraries - they won;t even re-QC them; they will politely have you ship them off to the central repository which is the graveyard of many a merger. Amgen is polished at acquisitions - at first they mostly leave you alone until mid-levels get to some retreats and Projects get eliminated faster thsn you can read the memos about it. You will see a pleasing upgrade in benefits but also on day 1 expect the utter sterilization of anything ONYX - signs, letterheads whatever - all magically erased - so save the mementos if you got em ;-). Well that's essentially the playbook - enjoy.

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14. darwinsdog on August 26, 2013 8:33 PM writes...

A little more and this isn't unique to this merger but expect anything you have in SF that is good, something significant you have done and you are proud of; be it basic science, development teams, clinical or manufacturing - someone from AMGN will take credit for it - OK you did it, everyone knows you did it but some semi-retired, mid-level Amgen-er will align with the effort and then do some insignificant project team repackaging thing that will be blown-up in a mid-level promulgated, narcissistic memo and/or press release and history is re-written by the acquirer. That might be the most irksome thing AMGN culture does - I'd like to think they won't, but if there is one thing we learned from Stanford prison style expts it is human nature and especially for those that are best fit for acquisition environments.

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15. NH_chem on August 27, 2013 6:20 AM writes...

Sadly, small molecule development will always be the ugly step daughter at a biotech and ultimately be dismissed. It is sad because only Onyx and Gilead were hiring people in the Bay Area.

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16. petros on August 27, 2013 9:36 AM writes...

Consensus estimate seems to be for a NPV of around $7 billion for Kyrolis. So Amgen must rate the royalty streams as fairly valuable unless they thing that NPV is an underestimate

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17. Anonymous on August 27, 2013 11:46 AM writes...

@16: The additional $3.4bn must be "entertainment value" of letting everyone go.

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18. Anonymous on August 27, 2013 12:53 PM writes...

More restructurizationing seems inevitable

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19. Matthew Herper on August 28, 2013 2:50 PM writes...

Of course, Onyx doesn't really HAVE research staff. They are a prime example of a development-only company. Maybe Amgen will need those folks, I don't know; their own oncology people have not exactly done amazing things.

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