By Karen Pihl-Carey

Just three months after securing a deal with Warner-Lambert Co. to advance ONYX-015 and two new armed anticancer vaccines, Onyx Pharmaceuticals Inc. raised $18 million through a private placement that could go toward advancing another vaccine that targets Rb suppressant tumors.

The Richmond, Calif.-based company sold 2 million shares of its common stock to four institutional investors at a price of $9 per share.

Onyx's stock (NASDAQ:ONXX) closed Wednesday at $12.562, up $1.312. Following the private placement, the company has about 13.5 million shares outstanding.

"Obviously, from our standpoint, further strengthening our balance sheet is going to allow us to capitalize on our proprietary therapeutic virus platform," said Hollings Renton, president and CEO of Onyx. "With this $18 million and our current cash position, we'll have cash on hand of $32 million."

Additional capital from the Warner-Lambert collaboration will push that amount to over $40 million, Renton told BioWorld Today. And with Warner-Lambert funding development for Onyx, the company's burn rate will be reduced from $20 million last year to about $10 million in 2000, he said.

Onyx and Warner-Lambert formed their deal in October to develop and commercialize ONYX-015 and two new armed anticancer vaccines. (See BioWorld Today, Oct. 19, 1999, p. 1.)

The four institutional investors in the private placement were Alta BioPharma Partners LLC, of San Francisco; Domain Associates, of Princeton, N.J.; Chase Capital Partners, of New York; and London-based International Biotechnology Trust plc.

"Three of the four are new investors," Renton said. "The one current is International Biotechnology Trust. They had invested in a private placement two years earlier."

The company plans to file a registration statement with the SEC within 90 days for the resale of the shares.

Aside from Onyx's lead product, ONYX-015, the company has in preclinical trials the two new armed anticancer vaccines, one of which is a prodrug converting enzyme. The second product is undefined.

Onyx also is studying multiple anticancer genes, as well as the virus that targets Rb suppressant tumors.

"They're preclinical at this stage, and what we have indicated as a milestone is we would hope to be in a position to select one of these new viruses as a clinical development candidate within the year 2000," Renton said.

Warner-Lambert is paying for $40 million worth of Phase III costs of ONYX-015. Once development costs rise above that, Onyx will chip in 25 percent of the costs, and the $18 million private placement will help the company prepare for that.

"We want to make sure we also have capital on hand for those future capital calls as well," Renton said.

ONYX-015 is an adenovirus that has been genetically engineered so it no longer inactivates the p53 tumor gene in normal cells, but is designed to replicate in and kill tumor cells deficient in p53 activity. It is scheduled to enter Phase III testing late this quarter in head and neck cancer, in both recurrent patients and refractory patients. Onyx is looking at the protocol needed for simultaneous registration in the U.S. and Europe, Renton said.

The product also is being tested in Phase I/II trials in colorectal cancer that has metastasized to the liver and in pancreatic cancer. Finally, it is in a Phase I trial for non-small-cell lung cancer.

"In collaboration with Warner-Lambert, it's a much more aggressive clinical development program than obviously our financial resources would allow at the time," Renton said.