By Brady Huggett
Onyx Pharmaceuticals Inc. priced its public offering of 3 million shares at $15 a share, raising $45 million, a step below the mark of $64.5 million it set when it filed for the offering in September.
"We are happy to have raised additional income in a difficult market," said Hollings Renton, president and CEO of Onyx.
In March, Onyx filed to sell 2.5 million shares, but withdrew the offering in April due to market conditions. In September, Onyx again filed, this time for 3 million shares of its common stock when it was trading at $21.53 per share. The $15 price leaves Onyx nearly $20 million under its estimate at the time of filing. (See BioWorld Today, March 29, 2000, Sept. 25, 2000.)
Onyx's stock (NASDAQ:ONXX) closed at $15 Thursday, down $2.063, or about 12 percent.
U.S. Bancorp Piper Jaffray, of Minneapolis, is lead manager for the offering, with CIBC World Markets, of New York, acting as co-manager. They have an overallotment option on 450,000 shares.
Renton said Onyx had roughly $40 million in cash June 30, and an annual burn rate of about $10 million, based on the figures from this year's first six months.
The net proceeds of the offering will be used to fund research and development activities, the potential commercialization of CI-1042 (formerly ONYX-015), the clinical development of product candidates, operating costs, capital expenditures, including a small-scale manufacturing facility, and other general corporate purposes. Onyx and Warner-Lambert Co., of Morris Plains, N.J., have an agreement to develop and commercialize CI-1042 together, a deal worth $155 million. (See BioWorld Today, Oct. 19, 1999.)
"The reason for the financing is not just for the burn rate," Renton said. "But also to continue with product development."
Onyx, of Richmond, Calif., is engaged in the discovery and development of novel cancer therapies. Its lead product, CI-1042, is currently in Phase III trials for head and neck cancer and in Phase I and II clinical trials for pancreatic cancer, gastrointestinal metastases to the liver, ovarian cancer, and Barrett's esophageal metaplasia.
Onyx and Bayer Corp. are collaborating on a Ras pathway inhibitor cancer agent that is in Phase I clinical trials. The funding responsibility for the product will be split 50-50 between Onyx and Bayer, Renton said. Onyx has another therapeutic agent aimed at killing retinoblastoma-deficient tumor cells and it plans to file an investigational new drug application for it at the end of 2001.
Renton said Onyx may seek a partners in the future.
"The intention is to develop the agent against retinoblastoma-deficient tumor cells through Phase II ourselves, before looking for any partners," Renton said. "But we may partner with companies that have the intellectual properties to place anti-cancer genes in therapeutic viruses."