Astex Pharmaceuticals, Inc. (ASTX) Becomes the Latest Biotech Domino to Fall

I think that Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX)’s experience could be instructive for Astex Pharmaceuticals, Inc. (NASDAQ:ASTX) investors who are disappointed with the Otsuka deal. Onyx initially spurned Amgen’s offer, thinking that it could get a much higher price. One analyst suggested that Onyx could go for as high as $180 per share — 50% more than Amgen, Inc. (NASDAQ:AMGN)’s initial offer. Others thought that around $150 per share was attainable. In the end, though, Onyx Pharmaceuticals, Inc. (NASDAQ:ONXX) sold out for $130 per share.

It’s quite possible that Astex could have gotten a better deal. However, as Onyx discovered, just because someone thinks a lot more money can be obtained doesn’t mean that it actually can be obtained.

After its second-quarter earnings release on Aug. 1, Astex CFO Michael Molkentin said that 2014 probably wouldn’t be as good of a year as 2013 because of Dacogen’s generic competition in the U.S. At that time, Astex’s stock traded around $5.50 per share. Now, it’s up more than 50%.

My view is that this selling now to Otsuka at a nice premium is better than potentially going into a more challenging 2014 without a buyer. It’s better to be a domino that falls than one left standing all by itself.

The article Astex Becomes the Latest Biotech Domino to Fall originally appeared on Fool.com is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. 

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