Cancer drugmaker Onyx Pharmaceuticals said on Sunday it rejected a roughly $10 billion takeover offer from larger biotechnology company Amgen as too low but still is considering selling itself. Onyx said Amgen's cash offer of $120 a share, which represents a premium of about 38 % to the company's Friday closing price, "significantly undervalued" its prospects.

Deutsche Bank analyst Robin Karnauskas estimated Onyx's value to a merger partner at up to $148 a share. At $140 a share, the deal would add to Amgen's earnings starting in 2015, she said in a research note.

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 did not respond to a request 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 Nexavar, a treatment for liver and kidney cancer, as well as colon cancer drug Stivarga in partnership with German pharmaceutical company Bayer. Last year, Onyx launched sales of blood cancer drug Krypolis, which Karnauskas estimates will reach peak annual sales of $3 billion.

Amgen has been looking for new ways to boost its product pipeline as sales for its flagship anemia drugs Aranesp and Epogen have been in a decline for years because of usage restrictions and safety concerns.

Chief Executive Officer Bob Bradway, who took the helm of the Thousand Oaks, California company just over a year ago, has been able to keep investors happy with higher dividends and share repurchases. Amgen 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% 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 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 U.S. Food and Drug Administration last July.

Large pharmaceutical companies have increasingly been looking to acquire smaller biotech firms to gain access to new drugs, often cancer drugs which can command high prices, 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% over the same period last year. Recent deals include generic drugmaker Actavis' $8.5 billion acquisition of Warner Chilcott and Human Genome Sciences' $3 billion sale to GlaxoSmithKline.