ONYX Pharmaceuticals 8-K/A Financial Statements and Exhibits

Exhibit 99.2

Financial Statements

Proteolix, Inc. (A Development Stage Company)

As of September 30, 2009 and for the nine months ended
September 30, 2009 and 2008, and for the period from
October 15, 2002 (inception) to September 30, 2009.

Proteolix, Inc.
(A Development Stage Company)

Financial Statements (Unaudited)

Contents

Balance Sheets (Unaudited)	1
Statements of Operations (Unaudited)	2
Statements of Cash Flows (Unaudited)	3
Notes to Unaudited Financial Statements	5

Proteolix, Inc.
(A Development Stage Company)

Balance Sheets

	September 30,			December 31,
	2009			2008
	(Unaudited)			(Note 1)
Assets
Current assets:
Cash and cash equivalents	$	25,016,179		$	66,363,011
Prepaid and other current assets		275,227			228,636
Total current assets		25,291,406			66,591,647
Property and equipment, net		4,917,354			5,890,515
Other assets		75,457			113,185
Total assets	$	30,284,217		$	72,595,347
Liabilities, convertible preferred stock, and stockholders’ deficit
Current liabilities:
Accounts payable	$	1,957,148		$	301,417
Accrued liabilities		4,209,172			5,506,405
Accrued clinical expenses		5,061,431			2,514,266
Current portion of notes payable		5,009,302			4,667,571
Warrant liability		413,394			292,770
Deferred rent current portion		670,085			5,080
Total current liabilities		17,320,532			13,287,509
Long-term portion of deferred rent		4,775,873			5,319,115
Long-term portion of notes payable		3,159,463			6,972,306
Commitments and contingencies
Convertible preferred stock, $0.001 par value, issuable in series:
Series A: 18,345,000 shares authorized; 18,300,000 shares issued and outstanding at September 30, 2009 and December 31, 2008 (aggregate liquidation preference of $18,300,000)		18,040,578			18,040,578
Series B: 26,600,000 shares authorized; 20,425,364 shares issued and outstanding at September 30, 2009 and December 31, 2008 (aggregate liquidation preference of $45,344,308)		43,288,671			43,288,671
Series C: 30,000,000 shares authorized; 29,614,654 shares issued and outstanding at September 30, 2009 and December 31, 2008 (aggregate liquidation preference of $78,774,979)		78,532,721			78,532,721
Stockholders’ deficit:
Common stock, $0.001 par value; 170,945,000 shares authorized; 4,503,368 and 3,837,127 shares issued and outstanding at September 30, 2009 and December 31, 2008, respectively		4,503			3,833
Additional paid-in capital		1,562,035			815,227
Deficit accumulated during the development stage		(136,400,159	)		(93,664,613	)
Total stockholders’ deficit		(134,833,621	)		(92,845,553	)
Total liabilities, convertible preferred stock, and stockholders’ deficit	$	30,284,217		$	72,595,347

See accompanying notes.

1

Proteolix, Inc.
(A Development Stage Company)

Statements of Operations
(Unaudited)

							Period From
							October 15,
							2002
	Nine Months Ended						(Inception) to
	September 30,						September 30,
	2009			2008			2009
Operating expenses:
Research and development	$	33,893,900		$	28,020,569		$	115,567,913
General and administrative		6,550,029			5,017,291			21,367,054
Restructuring charges		1,160,038			—			1,160,038
Loss from operations		(41,603,967	)		(33,037,860	)		(138,095,005	)
Interest income and other expense, net		(112,347	)		343,855			4,217,212
Interest expense		(1,019,232	)		(831,403	)		(2,522,366	)
Net loss	$	(42,735,546	)	$	(33,525,408	)	$	(136,400,159	)

See accompanying notes.

2

Proteolix, Inc.
(A Development Stage Company)

Statements of Cash Flows
(Unaudited)

							Period From
							October 15,
							2002
	Nine Months Ended							(Inception) to
	September 30,						September 30,
	2009			2008			2009
Operating activities
Net loss	$	(42,735,546	)	$	(33,525,408	)	$	(136,400,159	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,190,548			990,348			4,262,143
Debt discount amortization		67,569			38,287			163,130
Stock-based compensation		513,587			208,785			991,732
Revaluation of preferred stock warrant liability		120,624			(55,350	)		107,624
Change in fair value of convertible preferred stock liability		—			—			(1,844,347	)
Issuance of common stock in exchange for services		—			—			25,300
Issuance of Series B convertible preferred stock for services		—			—			149,998
Changes in operating assets and liabilities:
Prepaid and other current assets		(49,117	)		82,370			(258,107	)
Other assets		37,728			7,499			(75,457	)
Accounts payable		1,655,731			(1,702,966	)		1,957,148
Accrued liabilities		1,249,932			2,051,988			9,270,603
Deferred rent		121,763			708,592			1,595,958
Net cash used in operating activities		(37,827,181	)		(31,195,855	)		(120,054,434	)
Investing activities
Purchase of property and equipment		(214,861	)		(2,077,465	)		(9,173,732	)
Proceeds received as lease incentive		—			1,030,757			3,850,000
Net cash used in investing activities		(214,861	)		(1,046,708	)		(5,323,732	)
Financing activities
Proceeds from issuance of convertible preferred stock, net of issuance costs		—			78,532,721			141,556,319
Proceeds from issuance of common stock		233,891			89,969			526,621
Proceeds from issuance of notes payable		—			15,000,000			16,500,000
Repayment of notes payable		(3,538,681	)		(2,444,408	)		(8,188,595	)
Net cash (used in) provided by financing activities		(3,304,790	)		91,178,282			150,394,345
Net (decrease) increase in cash and cash equivalents		(41,346,832	)		58,935,719			25,016,179
Cash and cash equivalents at beginning of period		66,363,011			21,301,474			—
Cash and cash equivalents at end of period	$	25,016,179		$	80,237,193		$	25,016,179

3

Proteolix, Inc.
(A Development Stage Company)

Statements of Cash Flows (continued)
(Unaudited)

					Period From
					October 15,
					2002
	Nine Months Ended				(Inception) to
	September 30,				September 30,
	2009		2008		2009
Supplemental disclosure of cash flow information
Cash paid during the year for interest	$	914,789	$	767,415	$	2,281,645
Supplemental schedule of noncash investment and financing activities
Warrant for Series A convertible preferred stock issued in connection with notes payable	$	—	$	—	$	35,500
Warrant for Series B convertible preferred stock issued in connection with notes payable	$	—	$	270,270	$	270,270
Common stock warrants issued for facility lease	$	—	$	3,385	$	22,885
Issuance of Series B convertible preferred stock for services	$	—	$	—	$	149,998

See accompanying notes.

4

Proteolix, Inc.
(A Development Stage Company)

Notes to Unaudited Financial Statements

September 30, 2009

1. Organization and Basis of Presentation

Proteolix, Inc., or the Company, is primarily engaged in the development of novel human therapeutic agents that target protein degradation pathways in cells for the treatment of cancer and other diseases. The Company was incorporated in the state of Delaware on October 15, 2002.

The Company’s operations are based in South San Francisco, California, and principal activities to date have involved laboratory research and preclinical development, raising capital, and recruiting personnel. Accordingly, the Company is considered to be in the development stage.

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP, for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009 or for any other future period.

The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our audited financial statements for the year ended December 31, 2008.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

5

Proteolix, Inc.
(A Development Stage Company)

Notes to Unaudited Financial Statements (continued)

1. Organization and Basis of Presentation (continued)

Income Taxes

On July 13, 2006, the FASB released FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement 109, or FIN 48 The Interpretation clarifies the accounting for income taxes by establishing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on recognition, derecognition, measurement, classification of tax positions, interest and penalties, accounting in interim periods, and disclosures. Under FSP FIN 48-3 issued on December 30, 2008, the adoption of FIN 48 was deferred until fiscal years beginning after December 15, 2008 for nonpublic companies. FIN 48 was effective for the Company beginning January 1, 2009. The result of the adoption had no material impact on its financial position and results of operations.

2. Fair Value Measurement

The Company’s financial assets and financial liabilities subject to fair value measurements on a recurring basis, and the levels of the inputs used in such measurements, are as follows as of September 30, 2009 and December 31, 2008:

	Fair Value Measurement at September 30, 2009 Using
	Quoted Prices in		Significant		Significant
	Active Markets for		Other Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Financial assets:
Money market fund	$	22,644,175	$	—	$	—
Financial liabilities:
Warrant liability	$	—	$	—	$	413,394

6

Proteolix, Inc.
(A Development Stage Company)

Notes to Unaudited Financial Statements (continued)

2. Fair Value Measurement (continued)

	Fair Value Measurement at December 31, 2008 Using
	Quoted Prices in		Significant		Significant
	Active Markets for		Other Observable		Unobservable
	Identical Assets		Inputs		Inputs
Description	(Level 1)		(Level 2)		(Level 3)
Financial assets:
Money market fund	$	64,569,985	$	—	$	—
Financial liabilities:
Warrant liability	$	—	$	—	$	292,770

The following table presents the changes in liabilities measured at fair value on a recurring basis using Level 3 inputs for the nine month period ended September 30, 2009:

	Preferred Stock
	Warrants
	Liability
Balance at December 31, 2008	$	292,770
Unrealized loss included in other income		120,624
Realized gain/loss included in other income		—
Balance at September 30, 2009	$	413,394

3. Commitments and Contingencies

The Company recorded a liability of $285,000 and $250,000 at September 30, 2009 and December 31, 2008, reflecting management’s best estimate of the amount owed at each reporting date related to disputed charges for services performed by a consultant during the year ended December 31, 2008. The Company is in the process of negotiating with the consultant and, accordingly, the final payment could differ from the estimate recorded at September 30, 2009.

The Company is subject to various claims and assessments in the ordinary course of business. None of these matters are expected to have a material adverse effect on the Company’s financial position or results of operations.

7

Proteolix, Inc.
(A Development Stage Company)

Notes to Unaudited Financial Statements (continued)

4. Equity Related Activity

A summary of the stock option activity under the 2003 Equity Incentive Plan (the Plan) is as follows:

				Outstanding Options
	Shares						Weighted-
	Available			Number of			Average
	for Options			Shares			Exercise Price
Balances, December 31, 2008		2,545,401			10,380,855		$	0.27
Increase in authorized shares		3,000,000			—
Options granted		(6,675,975	)		6,675,975		$	0.50
Options forfeited		2,494,308			(2,494,308	)	$	0.41
Options exercised		—			(666,442	)	$	0.35
Balances, September 30, 2009		1,363,734			13,896,080		$	0.42

A summary of the total outstanding and vested options as of September 30, 2009, is as follows:

	Options Outstanding
			Weighted-Average		Number
	Number		Remaining Contractual		Vested and
Exercise Price	Outstanding		Life (in Years)		Exercisable
$0.10		402,278		4.72		336,471
$0.22		3,072,178		6.62		1,541,855
$0.47		913,567		8.14		326,577
$0.50		9,508,057		9.35		1,226,264
$0.10 — $0.50		13,896,080		8.53		3,431,167

8

Proteolix, Inc.
(A Development Stage Company)

Notes to Unaudited Financial Statements (continued)

4. Equity Related Activity (continued)

Stock-Based Compensation

The estimated grant date fair value of employee stock options was calculated using the Black-Scholes valuation model, based on the following assumptions:

	September 30,
	2009			2008
Expected life (in years)		6.3			6.3
Risk-free interest rate		2.85	%		3.16	%
Volatility		66.74	%		61.00	%
Dividend yield		—			—

The weighted-average grant-date fair value of options granted for the nine-month periods ending September 30, 2009 and 2008 was $0.31 and $0.28 per share, respectively. The estimated fair value of employee stock options vested during the nine-month periods ending September 30, 2009 and 2008, was $473,383 and $195,093, respectively, of which $179,027 and $93,294, respectively, was recorded as general and administrative expense and $294,356 and $101,799, respectively, was recorded as research and development expense in each period.

As of September 30, 2009, the Company had employee stock-based compensation expense of $3,675,468 related to unvested stock options not yet recognized. The amount is expected to be fully recorded as stock-based compensation expense in the fourth quarter of 2009 as the vesting of all outstanding stock options was accelerated upon the close of the acquisition by Onyx Pharmaceuticals. See footnote 6 Subsequent Events.

5. Restructuring Charges

During the first quarter of 2009 the Company entered into a formal restructuring plan to lower the Company’s operating costs by reducing its headcount. A total of 29 employees were given notice of termination during the first quarter of fiscal 2009. The total charge to restructuring expense was $1,160,038 for personnel related costs. As of September 30, 2009, all amounts have been paid and there is no unpaid balance related to the restructuring plan.

9

Proteolix, Inc.
(A Development Stage Company)

Notes to Unaudited Financial Statements (continued)

6. Subsequent Events

Effective on November 16, 2009, Proteolix Inc. was acquired by Onyx Pharmaceuticals (Onyx), pursuant to the agreement and plan of merger, dated as of October 10, 2009. Under the terms of the transaction, Onyx made a $276 million cash payment upon closing of the transaction of which $27.6 million was placed in an escrow account and will be held until December 31, 2010 to secure the indemnification rights of Onyx and others with respect to certain matters. Additional payments include $40 million payable in 2010 based on the achievement of a development milestone and up to $535 million contingent upon the achievement of certain regulatory approvals for carfilzomib in the U.S. and Europe.

The Company has evaluated subsequent events through January 13, 2010, the date on which the financial statements were issuable and not beyond that date.

10