Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) Has Become a Wonder Stock - Fred Dunsel (06/25/12)
Last Thursday, biopharmaceutical company Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) enjoyed a dramatic 44% single-day gain to close at $63.78. 23 million shares were traded that day, about 15 times the daily average. Topping off this stunning performance, the stock went on to gain another 3% on Friday to close at $65.67. During intra-day trading on Friday, Onyx even reached a 10-year high of $67.29, not bad for a stock that has been trading around $37 to $43 in the past three months.
Last week’s performance came about after the FDA Oncologic Drugs Advisory Committee, comprising of independent experts, recommended the approval of Onyx’s cancer drug Kyprolis, unexpectedly downplaying the agency’s earlier concerns about the drug’s side effects. The FDA is now expected to make a final decision by 27 July on the drug, which is being studied as a treatment option for patients with relapsed and refractory multiple myeloma. The San Francisco-based company quickly acknowledged the importance of the latest vote of approval by issuing a statement, saying that the vote "is an important regulatory milestone in the review of Kyprolis, and we are committed to working with the FDA to bring this treatment to patients as quickly as possible."
Wall Street analysts immediately seized on this unexpected turn of events and played up Onyx’s prospects in the coming months. JP Morgan analyst Cory Kasimov wrote, “We now assume a 90% probability of accelerated approval.” Deutsche Bank analyst Navdeep Singh estimated that Kyprolis’ sales could reach $1.5 billion. Goldman Sachs analysts reiterated their “buy” rating, with an upgraded $63 target price. Meanwhile, analysts at Robert W. Baird and Rodman & Renshaw also upgraded their ratings from “neutral” to “outperform”. Kyprolis, which does not cure the disease but buys the patient more time, is estimated to be worth $570 million to Onyx, which now has a market cap of $4.2 billion.
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