Assistant Managing Editor

Concurrent offerings of stock and convertible notes are expected to bring Onyx Pharmaceuticals Inc. as much as $310.3 million in net proceeds - $356.9 million if underwriters opt to buy more shares and notes - as the firm looks to expand its pipeline offerings beyond the cancer drug partnered with Bayer HealthCare Pharmaceuticals Corp.

Executives at the Emeryville, Calif.-based firm remained cagey during last week's earnings call regarding how they intended to grow that pipeline. But with more than $800 million in the bank after the offerings, Onyx could easily be setting itself up for a sizeable, late-stage deal that could provide a near-term opportunity to follow Nexavar (sorafenib), approved in liver and kidney cancers and in various stages of development in additional cancer types.

The firm's only other programs are early stage, the most advanced of those, a JAK2 inhibitor licensed last year from S*Bio Pte. Ltd., only in Phase I.

But President and CEO Tony Coles insisted during last week's earnings call that the firm would look at oncology "opportunities at every stage" in development, maintaining that early stage deals in 2008 with Singapore-based S*Bio and London-based BTG plc (for thymidylate synthase inhibitor ONX 0801) have worked well for the company so far.

"So it would be wrong to assume that we are only interested in late-stage opportunities," he told investors, adding that Onyx would continue considering Phase I-stage and preclinical candidates "as part of the mix of things" to take on.

Even so, Wall Street seemed puzzled by the amount and timing of the offerings - coming ahead of the full dataset from the Nexavar-plus-Xeloda trial expected later this year - sending Onyx's shares falling 15 percent last week, despite better-than-expected second-quarter earnings. The stock (NASDAQ:ONXX) rebounded after the offerings priced, closing Friday at $32.21, up $1.54.

Onyx is offering 4 million shares of common stock priced at $30.50 each, with an additional 600,000 shares available to underwriters to cover overallotments, and is selling $200 million in 4 percent convertible senior notes due 2016, with $30 million more offered to underwriters. Goldman, Sachs & Co. is acting as the sole book-running manager, with Barclays Capital Inc., J.P. Morgan Securities Inc. and Lazard Capital Markets LLC serving as co-managers.

In addition to business development activities, funds also could go toward studies seeking to expand the use of Nexavar in other cancer settings.

The multikinase inhibitor is in Phase III testing in combination with Tarceva (erlotinib, OSI Pharmaceuticals Inc. and Genentech) and as an adjuvant in liver cancer, and is in two Phase III trials in non-small-cell lung cancer, including a recently started monotherapy trial in third- and fourth-line settings.

Last month, Onyx and Wayne, N.J.-based Bayer reported that a Phase II study of Nexavar in combination with Xeloda (capecitabine, Roche Holdings AG) met its primary endpoint of extending progression-free survival over Xeloda alone in breast cancer patients, boosting shares 21 percent that day. The next data point in breast cancer is expected by the end of this year from another Phase II study of the drug in combination with paclitaxel in HER2-negative patients. (See BioWorld Today, July 23, 2009.)

Nexavar also is moving into Phase II in ovarian and colorectal cancers.

Global sales of the drug rose to $201 million for the second quarter, with Onyx recording about $60.2 million of that revenue under its deal with Bayer.

In May, the company filed suit against its big pharma partner, accusing Bayer of developing a slightly different version of Nexavar on its own that could compete against the jointly owned product. (See BioWorld Today, May 19, 2009.)

Onyx, which reported net income of $15 million, or 27 cents per share, for the second quarter, expects to have about 61 million shares outstanding following the public offering.

In other financings news:

• Ariad Pharmaceuticals Inc., of Cambridge, Mass., completed its public offering of 19 million shares priced at $1.75 apiece and said underwriters exercised their overallotment option of 2.85 million shares in full. Net proceeds to the firm totaled about $35.6 million. (See BioWorld Today, Aug. 5, 2009.)

• Generex Biotechnology Corp., of Worcester, Mass., is pulling in gross proceeds of $5.65 million in a registered direct offering of about 8.6 million shares of common stock priced at 66 cents per share. The company also issued warrants to acquire up to nearly 3 million shares at 79 cents apiece. Net proceeds are expected to total $5.3 million, and will be used for general corporate purposes, including the continuation of clinical trials and commercialization of the company's oral insulin formulation, as well as for research and development of other products. Midtown Partners & Co. LLC served as placement agent. Shares of Generex (NASDAQ:GNBT) fell 2 cents to close Friday at 64 cents.

Published  August 10, 2009