Chiron Corp. and a group of venture capital investors saidMonday that they have formed Onyx Pharmaceuticals todevelop cancer therapeutics.

The company will focus on genes or proteins inside the cell thatregulate the growth of cancer cells, and will develop smallmolecule drugs targeted at genes or gene products.

The new company is the brainchild of Avalon Ventures, whichalong with three other venture firms is putting up $5 millionand will own 42.8 percent of Onyx. The other venture partnersare Institutional Venture Partners; J.H. Whitney & Co.; andKleiner, Perkins, Caufield and Byers.

Chiron of Emeryville, Calif., owns 42.8 percent of Onyx and isputting in $4 million in services, equipment, facilities use andcash, plus a technology license. The remaining 14.4 percent willbe owned by Onyx employees and its scientific advisory board.

Chiron is licensing technology to Onyx for ras oncogenes, GAPsignaling proteins and tumor suppressor genes.

Onyx is part of a new wave of companies targeting intracellularmechanisms, said Brook Byers, a partner at Kleiner, Perkins.

"The vision here is that if you're going to have great therapiesagainst cancer, you have to go against oncogenesis at thefundamental level," Byers told BioWorld. "In the long run, theonly way to have a real solution to cancer is to go after it at thelevel of the mechanisms in the cell."

"We decided six or eight months ago that we wanted to do adeal in molecular oncology and put together a scientificadvisory board," said Kevin Kinsella, a partner at Avalon.Avalon wanted the new company to be headed by FrankMcCormick, vice president of research at Chiron.

"We were sympathetic to Frank, who wanted more money andmore opportunity to focus on what he's good at, which isscience," said Chiron spokesman Larry Kurtz.

In addition, said Kurtz, "we have a lot of commercialopportunities that need funding that are close to themarketplace. So we couldn't put enough funding into thisprogram. While we don't own 100 percent, the venturepartners have brought something to the table with thescientific advisory board and the money and will bring morethrough corporate partners they're hoping to sign up."

"We anticipate deals with companies like Sandoz with aninterest in this area," said Kinsella. "Sandoz has financed ourcurrent Avalon fund in order to have access to this kind oftechnology."

Chiron will continue work in other cancer technologies,including antibodies, receptors, gene therapy and cancervaccines, and will have rights to new Onyx technology for usein diagnostics, vaccines and gene therapy.

Chiron (NASDAQ:CHIR) said it also expects to collaborate withOnyx in development and marketing of products.

McCormick will serve as vice president of research, Kinsellawill be chairman, and Samuel Colella of Institutional VenturePartners will be acting president and CEO. Chiron's molecularoncology research group will move to Onyx.

Dr. Ha rold Varmus of the University of California, SanFrancisco, will chair the scientific advisory board. Varmus in1989 shared the Nobel Prize in medicine for work on howretroviral oncogenes replicate and cause cancer.

-- Karen Bernstein BioWorld Staff

(c) 1997 American Health Consultants. All rights reserved.