ZIOPHARM Oncology (ZIOP) Analysis - Stock Analysis, Stock Ratings

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Onyx Writes $276M Check to Proteolix
Excerpt from the InvestorGuide.com Stock of the Day on 10/12/2009

The season of mergers and acquisitions is still charging forward. Companies are seeking out great deals and the time to make these purchases has arrived. Onyx Pharmaceuticals Inc. is the latest to join the growing list of companies snapping up other businesses now that the economy is showing signs of a recovery. Onyx has agreed to purchase Proteolix Inc, a privately held biotechnology company for $276 million. What elements of Proteolix made it an attractive purchase for Onyx? Will this deal become lucrative for the pharmaceutical company or will the company need a dose of its own medicine?

Onyx Pharmaceuticals Inc. is not a well-known leader among drug development companies. As with most companies of this sort, Onyx has struggled to remain profitable. Onyx's reliance on its partnership with the German drug giant Bayer and the cancer drug Nexavar have been the primary source of income for the company. This fact has caused investors to look at the company as a risky investment due to its lack of diversity in income sources. Investors have been anxiously waiting to see the next move from the company ever since it raised $300 million in August. There are a few factors that most likely contributed to Onyx's decision to purchase Proteolix. Onyx's cancer therapy Nexavar missed its main goal in a Phase II trial in breast cancer last month. As mentioned earlier, this is one of the primary sources of income for the drug company. Despite the recent failure of Nexavar, Chief Executive Officer Tony Coles expects the drug to bring in $1 billion in revenue next year. Another factor that may have made Proteolix enticing to Onyx is the fact that it is currently testing carfilzomib as a treatment for multiple myeloma, the second most common blood cancer after leukemia. If these tests prove to be successful, this will give Onyx entry into the $16 billion market for hematologic cancer. Entry into this market will not be cheap for Onyx. The company may have to pay an additional $575 million over the course of years for development and regulatory approvals of the experimental drug. This will look like a drop in the bucket if Onyx is able to capture only a small percentage of the multibillion dollar market. More >

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Will Shareholders Agree to Sell Genentech?
Excerpt from the InvestorGuide.com Stock of the Day on 2/2/2009

About six months ago, Swiss drugmaker Roche offered to buy out all of Genentech's remaining stock in a deal worth $44 billion. This equals about $89 per share. This represented a 9 percent premium at the time. The board of directors evaluated this offer and about a month later, rejected the bid saying the price significantly undervalued the company's worth and growth potential. Little else has occurred since, but on Friday, Roche took the deal directly to shareholders asking to buy their equity for $86.50 per share. The US biotech firm advised shareholders not to take action so it can review its current position and prepare a formal response. Investors and analysts expect an announcement within two weeks. By the end of Friday, Genentech's stock closed at $81.50, indicating investors are complying. Having been rejected once by the company, will Roche be rejected a second time by shareholders? More >