Onyx Pharmaceuticals Inc said on Sunday it rejected a roughly $10 billion takeover offer from larger rival Amgen Inc as too low but is still considering a sale of the company.
The company said the offer price by Amgen of $120 a share in cash, which represents a premium of about 38 percent to the company's Friday closing price, "significantly undervalued" its prospects.
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Onyx said in a statement it was "actively exploring" a merger partner, and that it had hired financial advisor Centerview Partners to contact potential buyers. The San Francisco-based company cited "expressions of interest" from Amgen and other unnamed third parties.
An Onyx spokeswoman declined to comment further on the statement. Amgen could not be reached for comment.
Onyx has a market cap of $6.32 billion and revenue of $362 million in 2012, while Amgen is the world's largest biotech company, with a market cap of about $74 billion.
Onyx sells thyroid cancer treatment Nexavar and colon cancer drug Stivarga in partnership with German pharmaceutical company Bayer AG .
Amgen has been looking for new ways to boost its product pipeline as sales for its anemia drugs Aranesp and Epogen have been in a decline for years because of usage restrictions and safety concerns.
The company said earlier this year it was making a push into biosimilars - cheaper alternative versions of biotech medicines - with plans to launch six beginning in 2017.
Amgen's first-quarter sales fell short of expectations, as revenue for the period rose 5 percent to $4.24 billion which was short of Wall Street projections of $4.37 billion.
The Financial Post reported the offer on Friday, sparking a steep jump in Onyx shares in after-hours trading.
ISI Group analyst Mark Schoenebaum wrote that if a deal were to be made, Onyx's Kyprolis cancer drug would fit well into Amgen's cancer drug sales and marketing infrastructure and complement Amgen's portfolio of cancer drugs.
Kyprolis, developed for patients with multiple myeloma who have received at least two prior therapies, was approved by the Food and Drug Administration last July.
Large pharmaceutical companies have increasingly been looking to acquire smaller biotech firms to gain access to new drugs as they face significant revenue losses stemming from expired patents.
This need has driven the volume of healthcare M&A in the first six months of 2013 to $93.6 billion up 30.2 percent over the same period last year.
Recent deals include generic drugmaker Actavis Inc's $8.5 billion acquisition of Warner Chilcott and Human Genome Sciences' $3 billion sale to GlaxoSmithKline Plc .
(Editing by Doina Chiacu, Bill Trott, Marguerita Choy and Diane Craft)