West Coast Editor

Six months after slicing its staff by one-third to focus on its late-stage program, Onyx Pharmaceuticals Inc. raised $20 million for working capital in a private placement.

Richmond, Calif.-based Onyx sold 2.97 million shares of common stock at $6.75 per share and issued warrants to purchase 743,229 shares of stock at $9.59 per share.

Onyx's stock (NASDAQ:ONXX) closed Thursday at $7.84, up 39 cents.

Focused on cancer, Onyx is developing two lead products: BAY 43-9006, a small-molecule compound that inhibits RAS kinase (an enzyme that signals tumors to grow), which is in Phase I and Phase I/II testing and partnered with Bayer AG, of Leverkusen, Germany; and ONYX-015, a modified adenovirus targeting cancer cells with a mutated p53 pathway, in Phase III work for recurrent head and neck cancer and Phase II/III testing for refractory head and neck cancer.

Most of the money will go toward those drugs, said Hollings Renton, president and CEO of Onyx.

"Unfortunately, we've had to reduce efforts on some of the newer products to husband our resources," he said.

In August, Onyx said it was taking back full ownership of ONYX-015 for its lead indication from Pfizer Inc., of New York, as well as for other cancer types treated by injection or regional routes of delivery. The original deal was made with Warner-Lambert Co., before it became part of Pfizer, which retains rights for ONYX-15 only as an intravenous therapy, and Onyx gets no money from the program. (See BioWorld Today, Aug. 9, 2001.)

"Clearly, more of our money is spent today on ONYX-15, because we're funding 100 percent of it, and we're making sure we can manufacture the product," Renton told BioWorld Today.

Near the end of last year, Onyx entered a manufacturing deal with XOMA Ltd., of Berkeley, Calif., for ONYX-015. The five-year agreement, extendable in three-year increments, is worth potentially more than $35 million, and analysts have described XOMA as making progress with the near-term difficulty of coming up with enough of the drug.

"There are no real new updates with XOMA," Renton said. "We've made steady progress with it, particularly during the early part of this year. We've had to make some changes in the process to move it up in scale by a factor of 10."

The manufacturing issue for ONYX-015 is not expected to be fully resolved until the second half of 2002, and the program for BAY43-9006 has become the subject of special interest, with data from that research likely to be disclosed at the annual meeting of the American Society of Clinical Oncology later this month in Orlando, Fla.

Onyx's cash position at the end of the first quarter was $48 million.

"This [financing] adds $20 million to that, and we have about a $10 million-per-quarter burn rate," Renton said. "It will go up a little more this year, and in 2003 it could go up further when we go into Phase III with [BAY43-9006]."

Participants in the most recent financing included Domain Associates LLC, already an Onyx shareholder, and new investors OrbiMed Advisors LLC, Perceptive Life Sciences Fund and Federated Kaufmann Fund, all of New York, as well as other investors.