Washington Editor

In a move to strengthen its focus in a single area, Onyx Pharmaceuticals Inc. said it will cut most of its staff, leaving about 20 people to work on its lead cancer compound, BAY 43-9006.

The decision follows a January restructuring, resulting from Onyx's loss of Warner-Lambert Co. as a partner in the development of the cancer drug ONYX-015, a modified adenovirus. (See BioWorld Today, Jan. 28, 2003, and Sept. 18, 2003.)

At that time, the company cut 25 percent of its 95-person staff. This time the cuts will be felt in the company's therapeutic virus area, which included the ONYX-015 staff.

While many of the company's development programs have been set aside, Julie Wood, company spokeswoman, told BioWorld Today Onyx could revive the programs at some point, but for now the focus is BAY 43-9006.

"Without a corporate partner in the near term to share the investment needed to make meaningful progress in our therapeutic virus program, we cannot continue to fund this program as well as BAY 43-9006," she said. "At this point in time, it is important that we apportion our resources in a way that will most directly advance the commercialization of BAY 43-9006."

Onyx believes the employee reduction will save it $4 million quarterly. However, the savings are expected to be offset by increased clinical development expenses associated with BAY 43-9006. At the end of the first quarter, Onyx reported $37.7 million in cash. Wood said the company had not provided a forecast on the burn rate. In January, however, it was reported that restructuring related to ONYX-015 would drop the burn rate from $12 million per quarter to $9 million per quarter.

BAY 43-9006 is a Raf kinase inhibitor partnered with Bayer Corp., of Pittsburgh, a subsidiary of Leverkusen, Germany-based Bayer AG.

As part of its press statement announcing the staff reductions, Onyx said it anticipates entering Phase III trials later this year for the cancer product. Neither the statement nor Wood indicated the type of cancer Onyx and Bayer were studying. Wood also said it would be premature to discuss whether the upcoming Phase III would be a pivotal trial.

BAY 43-9006 has been studied in four Phase I single-agent studies, eight ongoing Phase Ib studies combining BAY 43-9006 with different standard chemotherapies and two ongoing Phase II single-agent studies.

Under the arrangement between Onyx and Bayer, Onyx is bound to pay 50 percent of development costs. Onyx would share U.S. profits equally, but elsewhere, except Japan, Onyx's share would be less than 50 percent since Bayer has exclusive rights. In Japan, Bayer will fund product development and Onyx would receive a royalty based on sales.

The agreement also includes milestone-based, interest-free loan payments, including a $5 million loan that Onyx received in the third quarter of 2002 at the beginning of Phase II trials, a $15 million loan when Phase III studies begin, a $10 million payment when the companies file for regulatory approval and $10 million on approval.

Onyx's stock (NASDAQ:ONXX) closed Thursday at $13.20, up 74 cents.