Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) has become an acquisition target for many companies. The cancer drug maker has rejected an unsolicited acquisition offer of $120 per share from Amgen Inc. (NASDAQ:AMGN). Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) said in a statement that it is looking for potential suitors. It rejected Amgen Inc (NASDAQ:AMGN)’s offer because the bid significantly undervalued Onyx Pharmaceuticals Inc. (NASDAQ:ONXX).

Amgen Inc (NASDAQ:AMGN) was paying a 38 percent premium to its closing price on Friday, valuing the biotech company at $8.7 billion. Onyx Pharmaceuticals Inc. shares surged a record 51.3 percent to $131.33 on Monday.

OnyxWhy Amgen Targeted Onyx

The San Francisco-based Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) has three major drugs under its stable. It sells liver and kidney cancer drug Nexavar, and colon cancer drug Stivarga in collaboration with Bayer AG (OTCMKTS:BAYRY) (FRA:BAYN). Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) launched its third drug Krypolis last year, which analysts expect to generate $3 billion in annual sales. Onyx has also licensed its breast cancer drug palbociclib to Pfizer Inc. (NYSE:PFE), for which it gets 8 percent global royalty.

Amgen Inc. (NASDAQ:AMGN) is trying to boost growth amid safety concerns that affected the sales of its anemia drug. Amgen Inc. (NASDAQ:AMGN) has five blockbuster drugs and patents on four of them will start expiring from 2015. Acquiring Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) could bolster its sales because Onyx products are yet to reach their sales peak.

Other Possible Bidders

After Onyx rejected Amgen Inc (NASDAQ:AMGN)’s offer, Soyoung Kim and Jessica Toonkel of Reuters reported that drug giants like Pfizer Inc. (NYSE:PFE) and Novartis AG (NYSE:NVS) could join the bidding war. Pfizer Inc. (NYSE:PFE) already has a partnership with Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) for palbociclib. Novartis AG (NYSE:NVS) has a strong presence in cancer market, and it may want to strengthen its position in the high margin business.

The other potential acquirer could be Bayer AG (OTCMKTS:BAYRY) (FRA:BAYN) which markets two of Onyx Pharmaceuticals Inc. (NASDAQ:ONXX)’s drugs.

JPMorgan analyst Cory Kasimov said in a research note to investors that the obvious bidders would be Bayer AG (OTCMKTS:BAYRY) (FRA:BAYN) and Pfizer Inc. (NYSE:PFE). JPMorgan also believes that any biopharmaceutical company that has a strong presence in oncology-hematology businesses could have a legitimate interest in Onyx Pharmaceuticals Inc (NASDAQ:ONXX). JPMorgan has an Overweight rating on the stock with $150 price target.

Onyx Pharmaceuticals Inc. (NASDAQ:ONXX) shares were up 2.25 percent to $134.28 at 11:30 AM EDT.