Washington Editor

To offset rising expenses related to its lead product, Nexavar (sorafenib tosylate), Onyx Pharmaceuticals Inc. raised about $126 million in gross proceeds through a public placement.

While officials at the company declined comment, a previously filed prospectus outlined plans for using the money, which centered on Nexavar, on file with the FDA. Onyx, of Emeryville, Calif., said it would direct proceeds to the drug's clinical trial costs and other research and development activities, both ongoing and planned, as well as sales and marketing activities in anticipation of Nexavar's commercial launch, and for general corporate purposes.

The company sold 5 million common shares at $25.25 apiece in the offering, which it expects to complete on or about Tuesday. Its net proceeds will total $118.2 million. Onyx also granted the deal's New York-based underwriters, Morgan Stanley & Co. Inc. and Merrill Lynch & Co., a 30-day, 750,000-share overallotment option.

The per-share price in the transaction reflects the stock's recent value, which has ranged from about $20 to about $30 over the past couple of months. On Friday, Onyx's shares (NASDAQ:ONXX) gained 72 cents to close at $26.10.

The prospectus also said the company also might apply a portion of the proceeds to in-license product candidates or acquire complementary businesses or technologies, though there are no current plans, commitments or agreements in place.

The cancer company's primary focus these days remains on Nexavar, which has long been partnered with Bayer Pharmaceuticals Corp., of West Haven, Conn. They filed for approval this summer based on an ongoing Phase III trial in kidney cancer. (See BioWorld Today, July 12, 2005.)

Data from the study, reported earlier this year at the American Society of Clinical Oncology meeting, showed that progression-free survival doubled to a median value of 24 weeks in Nexavar patients, compared to 12 weeks in placebo patients (p<0.000001).

A recent interim analysis of the randomized, placebo-controlled trial revealed an estimated 39 percent improvement in survival for patients receiving Nexavar compared to those on placebo (p=0.018, hazard ratio 0.72). (See BioWorld Today, May 17, 2005.)

In its most recent fiscal quarter, Onyx posted a $22.6 million net loss, twice the amount from the corresponding year-ago period. The company attributed that to its ongoing investment in Nexavar, largely due to expenses associated with the kidney cancer trial and the program's expansion into pivotal studies for liver cancer and metastatic melanoma. Other Nexavar-associated costs also have grown substantially, with a notable increase in precommercial marketing activities due to hiring a sales force for the drug.

Terms of Onyx's 11-year-old relationship with Bayer call for equal funding of the product's clinical program and marketing expenses in the U.S., where it would be co-promoted and generate a 50/50 profit split. In Europe, Bayer would handle sales and marketing responsibilities and receive a slightly higher profit percentage, while in Japan, Bayer would control all development, and Onyx would receive a high single-digit royalty.

Nexavar is a multi-kinase inhibitor that targets serine/threonine and receptor tyrosine kinases in both the tumor cell and tumor vasculature.

As of Sept. 30, Onyx had $172.8 million in cash, cash equivalents and marketable securities.