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Onyx Pharmaceuticals: Good Reasons for Raising Capital, Investors Overly Concerned

Posted on August 13, 2009

Last Wednesday Onyx Pharmaceuticals (ONXX) announced that it was going to raise additional financing by selling as much as 4.6 million shares and $230mm in convertible notes. The euphoria from the company s recent successful Phase 2 breast cancer results were quickly forgotten, as the stock plunged more than 20 percent in two days. Investors were taken aback as why a company with more than $450 million in cash would need an additional $370 million. Visions of a buyout by Bayer AG, its 50/50 Nexavar (approved for kidney and liver cancer) collaborator were replaced with images of a potentia...

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