By Lisa Seachrist
Onyx Pharmaceuticals Inc. raised $10 million in a private placement by selling 1.4 million shares to two institutional investors.
The company also extended a three-year cell cycle regulation collaboration with Warner-Lambert Co. for another three years, netting Richmond, Calif.-based Onyx $25 million, plus additional milestones.
International Biotechnology Trust plc, of London, is the lead investor in the private placement and is joined in the transaction by Lombard Odier & Cie, of Geneva. The two institutions purchased 1.4 million shares of common stock at $7.125 per share.
"We are really pleased to have this quality of investor coming in at this stage," said Hollings Renton, president and chief executive officer of Onyx. "Our cash position was already a strong $38 million as we entered 1998. This placement gives us $48 million."
As part of the transaction, Nicole Vitullo, senior vice president of the Rothschild Bioscience Unit, which manages the International Biotechnology Trust, will be appointed to Onyx's board of directors in February.
Renton said the money from the public placement will be used largely to finance ongoing Phase I and II trials of the firm's lead cancer therapeutic, ONYX-015, and to advance other potential products to the clinic.
ONYX-015 is a genetically engineered adenovirus that has been shown to replicate in and kill tumor cells deficient in p53 tumor suppressor gene activity. Mutations in p53 are the most common type of genetic abnormality in cancer, occurring in more than 50 percent of human tumors.
Under the extension of the cell cycle collaboration with Warner-Lambert's pharmaceutical research division, Parke-Davis, Onyx could receive up to $50 million in committed funding and milestones over the entire six-year term of the collaboration.
"We are very pleased that Parke-Davis has been willing to make such a substantial commitment of capital and scientists," Renton said. "It has made this a productive relationship with a critical mass of resources and people working together to generate novel cancer therapies."
Parke-Davis Optimizing Lead Compound
Scientists at Onyx and Parke-Davis identified the first lead compound in the cell cycle program in November 1996 using an assay developed by Onyx. Parke-Davis is in the process of optimizing the small-molecule compound and evaluating it in vivo. Since then, three other assays developed by Onyx have generated active compounds that could serve as the basis for the development of drug candidates.
Regulation of the cell cycle — the way that cells duplicate their DNA and divide into identical cells — is vital to prevent the duplication of cells with damaged DNA. In cancer cells, that regulation goes awry and damaged cells reproduce unchecked. Onyx focuses on identifying the cellular pathways that regulate cells and developing assays to test potential small-molecule drugs.
In addition to the cell cycle program, Onyx and Parke-Davis have an inflammation and autoimmunity collaboration centered on enzymes and intracellular processes involved in inflammatory and autoimmune diseases. The companies are focusing on the selective inhibition of phagocytes to decrease the tissue damage caused by unchecked phagocyte activity.
Onyx also has collaborations with Bayer AG, of Leverkusen, Germany, to discover inhibitors of the Ras oncogene for the treatment of cancer and with Eli Lilly and Co., of Indianapolis, to discover the role of BRCA1 in breast cancer.
"We are dedicated to getting to cancer at its genetic basis," Renton said. "The placement is a testament to the fact that we are implementing that strategy successfully. These pharmaceutical partnerships represent the value of our technology."
Onyx's shares (NASDAQ:ONYX) closed Thursday at $8, up $0.375. *