By Karen Young

Onyx Pharmaceuticals Inc. laid off 30 percent of its work force as a step to conserve cash in order to ensure continued development of late-stage products.

The company had about 130 employees before the layoffs occurred in the areas of research and administration.

¿This is the result of our focus on our late-stage programs,¿ said Helen Kim, senior vice president of development at Richmond, Calif.-based Onyx. ¿We decided that given the current market conditions and not knowing when the market would turn around to do additional financings, we wanted to make sure that we can conserve cash to support our clinical programs.¿

The company¿s burn rate is expected to increase following a change in its agreement with Warner-Lambert Co. (now Pfizer Inc.). In August, Onyx said it was taking back full ownership of ONYX-015 for its lead indications of head and neck cancer, as well as other cancer types either by injection or regional routes of delivery, Kim said. Warner-Lambert still has rights for IV therapy. Onyx no longer is receiving money from Warner-Lambert for this program. (See BioWorld Today, Aug. 9, 2001.)

At the end of the third quarter, Onyx had a cash position of $65.4 million. This year, the company has had a burn rate of about $7 million a quarter. The burn rate is estimated to increase by 40 percent to 50 percent in 2002, Kim said, and she projected the company¿s cash to take it through mid-2003. Total operating expenses of $12.1 million for the quarter were $2.6 million more than the same period a year ago, which Onyx attributed to process development and manufacturing costs related to the company¿s agreement with Xoma LLC in January of this year.

The transition of the ONYX-015 program from Warner-Lambert to Onyx is forcing Onyx to hire additional staff in clinical development and manufacturing.

¿We will be adding staff from now through 2002,¿ Kim said, noting that the staff additions ultimately will result in a work force of about 100.

ONYX-015, a modified adenovirus, is in Phase III trials for head and neck cancer, although Kim would not project a time for completion. ONYX-015 also is in Phase I and II trials for a number of other cancer indications, including metastatic colorectal cancer, oral leukoplakia and sarcoma, Kim said.

Onyx¿s attention also is focused on BAY 43-9006 in collaboration with Bayer Corp. BAY 43-9006 is a small-molecule compound that is being developed for the treatment of cancer by targeting RAS pathways. Essentially, it is a RAS kinase inhibitor. RAS kinase in an enzyme that signals tumors to grow.

BAY 43-9006 is in preclinical studies and Kim said it should be able to be developed for all solid tumors, but development is especially focused on non-small-cell lung, pancreatic, breast and prostate cancers.

Going forward, Onyx also will focus its research efforts on naming its next development candidate.

¿We are working on three potential candidates, and we will select one and move forward in the next year to year and a half,¿ Kim said.

Onyx also is looking for additional collaborative relationships.

The company has a separate research collaboration with Warner-Lambert on Armed Therapeutic Virus products, with the goal of developing drugs by placing a cytostatic gene in Onyx¿s virus to enhance the tumor-killing capability.

¿We have a lead product that¿s in preclinical ¿ cytosine deaminase,¿ Kim said.

Warner-Lambert is funding the cost of this research and will cover 75 percent of costs once it goes into clinical trials, Kim said.

Onyx¿s stock (NASDAQ: ONXX) fell 91 cents Tuesday, or 17.5 percent, to close at $4.30.

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