U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________to______________
Commission File Number: 0-28298
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ONYX PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3154463
- -------- ----------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
3031 Research Drive
Richmond, California 94806
(Address of principal executive offices)
(510) 222-9700
(Registrant's telephone number including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(XX) Yes ( ) No
The number of outstanding shares of the registrant's Common Stock, $0.001 par
value, was 9,825,708 as of October 31, 1997.
ONYX PHARMACEUTICALS, INC.
INDEX
PART I: FINANCIAL INFORMATION
PAGE
ITEM 1. Financial Statements
Condensed balance sheets - September 30, 1997 and
December 31, 1996 3
Condensed statements of operations - three and nine months
ended September 30, 1997 and 1996 4
Condensed statements of cash flows - nine months ended
September 30, 1997 and 1996 5
Notes to condensed financial statements 6
ITEM 2. Management's discussion and analysis of financial
condition and results of operations 9
PART II: OTHER INFORMATION
ITEM 2. Change in Securities and Use of Proceeds 13
ITEM 5. Other Information 14
ITEM 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
EXHIBIT INDEX 17
2
ONYX PHARMACEUTICALS, INC.
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS
(In thousands, except share data)
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 12,310 $ 36,258
Short-term investments 22,258 4,071
Other current assets 626 638
------------ -----------
Total current assets 35,194 40,967
Property and equipment, net 4,393 4,196
Notes receivable from related parties 866 396
Other assets 268 220
------------ -----------
TOTAL ASSETS $ 40,721 $ 45,779
------------ -----------
------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 543 $ 693
Accrued liabilities 3,027 1,277
Accrued compensation 631 439
Deferred revenue 2,169 1,631
Long-term debt, current portion 208 444
------------ -----------
Total current liabilities 6,578 4,484
Long-term debt, noncurrent portion - 99
Deferred rent 133 273
Stockholders' equity:
Preferred stock, $0.001 par value: 5,000,000 shares
authorized, none issued and outstanding - -
Common stock, $0.001 par value: 25,000,000 shares authorized,
9,822,098 and 9,514,285 shares issued and outstanding
as of September 30, 1997 and December 31, 1996, respectively 10 10
Additional paid-in capital 74,713 71,132
Deferred compensation (468) (632)
Accumulated deficit (40,245) (29,587)
------------ -----------
Total stockholders' equity 34,010 40,923
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 40,721 $ 45,779
------------ -----------
------------ -----------
See accompanying notes.
3
ONYX PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
Revenue:
Contract and other revenue $ 300 $ 739 $ 910 $ 989
Contract revenue from related parties 1,590 1,819 5,280 5,443
--------- -------- -------- --------
Total revenue 1,890 2,558 6,190 6,432
Operating expenses
Research and development 5,489 3,358 14,469 10,441
General and administrative 1,319 1,023 3,912 2,936
--------- -------- -------- --------
Total operating expenses 6,808 4,381 18,381 13,377
--------- -------- -------- --------
Loss from operations (4,918) (1,823) (12,191) (6,945)
Interest income, net 511 581 1,533 1,043
--------- -------- -------- --------
Net loss $ (4,407) $ (1,242) $(10,658) $ (5,902)
--------- -------- -------- --------
--------- -------- -------- --------
Net loss per share $ (0.45) $ (0.13) $ (1.10)
--------- -------- --------
--------- -------- --------
Shares used in computing net loss per share 9,816 9,461 9,678
--------- -------- --------
--------- -------- --------
Pro forma net loss per share $ (0.73)
--------
--------
Shares used in computing pro forma net loss per share 8,059
--------
--------
See accompanying notes.
4
ONYX PHARMACEUTICALS, INC.
CONDENSED STATEMENTS OF CASH FLOW
(In thousands)
(unaudited)
Nine Months Ended
September 30,
----------------------------------
1997 1996
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (10,658) $ (5,902)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 1,352 1,129
Forgiveness of note receivable 12 38
Amortization of deferred compensation 164 205
Changes in assets and liabilities:
Other current assets 12 (105)
Other assets (48) (84)
Accounts payable (150) 33
Accrued liabilities 1,750 571
Accrued compensation 192 207
Deferred revenue 538 (237)
Deferred rent (140) (17)
--------- --------
Net cash used in operating activities (6,976) (4,162)
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments (30,631) (9,907)
Sales and maturities of short-term investments 12,444 12,102
Capital expenditures (1,549) (1,067)
Notes receivable from related parties (482) -
--------- --------
Net cash provided by (used in) investing activities (20,218) 1,128
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (335) (313)
Net proceeds from issuance of common stock 3,581 35,303
--------- --------
Net cash provided by financing activities 3,246 34,990
--------- --------
Net increase (decrease) in cash and cash equivalents (23,948) 31,956
Cash and cash equivalents at beginning of the period 36,258 3,779
--------- --------
Cash and cash equivalents at end of the period $ 12,310 $ 35,735
--------- --------
--------- --------
See accompanying notes.
5
ONYX PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly,
they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three and nine months ended September 30, 1997 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to the financial
statements and footnotes thereto for the year ended December 31, 1996
included in the ONYX Pharmaceuticals, Inc. (the "Company" or "ONYX") Annual
Report on Form 10-K.
NOTE 2. NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of common
shares outstanding. Common equivalent shares are excluded from the
computation as their effect is antidilutive, except that, pursuant to the
Securities and Exchange Commission ("SEC") Staff Accounting Bulletins, common
and common equivalent shares issued during the 12-month period prior to the
filing of a registration statement in connection with the Company's initial
public offering at prices below the public offering price of $12.00 have been
included in the calculation as if they were outstanding for all periods
presented through March 31, 1996 (using the treasury stock method for stock
options at the estimated public offering price).
Pro forma net loss per share for the nine months ended September 30, 1996 has
been computed as described above and also gives effect to the conversion of
convertible preferred shares not included above that automatically converted
upon completion of the Company's initial public offering (using the if
converted method) from original date of issuance.
Historical net loss per share for the nine months ended September 30,1996 is
as follows:
Nine Months Ended
September 30, 1996
------------------
Net loss per share $ (1.06)
-----------
-----------
Shares used in computing net loss per share $ 5,559
-----------
-----------
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per share, which is required to be adopted on December 31,
1997. At that time, companies will be required to change the method currently
used to compute earnings per share and to restate all prior periods. There
will be no impact on loss per share for the three and nine months ended
September 30, 1997 and 1996.
6
ONYX PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(unaudited)
NOTE 3. COLLABORATIVE AGREEMENTS
On July 31, 1997, the Company signed a three-year research and development
agreement with Warner-Lambert aimed at discovering new therapeutics to
regulate inflammation and autoimmunity. Terms of the agreement provide for
receipt by the Company of an up-front licensing fee payable in three stages,
as well as milestone payments and royalties on eventual product sales. No
license fees have been received as of September 30, 1997. In return,
Warner-Lambert receives exclusive worldwide marketing rights to products
emerging from the collaboration. Total payments to the Company prior to
commercialization could total nearly $30 million. Warner-Lambert has the
option to extend the research term from July 31, 2000 to July 31, 2001
provided that Warner-Lambert notifies the Company of the extension by July
31, 1999. Warner-Lambert has the right to terminate the agreement at its
discretion on January 31, 1999 upon written notice, provided that research
payments to the Company are continued through July 31, 1999. In addition,
Warner-Lambert may terminate the research portion of the agreement, and
associated research funding and milestone payments, at its discretion if a
project director acceptable to Warner-Lambert has not been hired by ONYX
prior to January 31, 1998.
Note 4. MARKETABLE SECURITIES - AVAILABLE-FOR-SALE
The following is a summary of available-for-sale securities as of September
30, 1997:
Available-for-sale
Securities
Estimated fair value
(in thousands)
--------------------
Cash equivalents:
U.S. corporate securities $ 2,400
Foreign corporate securities 1,507
Money market funds 8,403
-------------
Total cash equivalents: 12,310
-------------
Short-term investments:
U.S. corporate securities 10,483
Foreign corporate securities 4,037
U.S. government securities 2,064
-------------
Total short-term investments 16,584
-------------
Total available-for-sale securities $ 28,894
-------------
-------------
As of September 30, 1997, the difference between the fair value and the
amortized cost of available-for-sale securities was insignificant. The
average portfolio duration is approximately two months, and the contractual
maturity of each of the investments does not exceed two years. Held at
September 30, 1997, and excluded from short-term investments above, is
$5,674,000 of certificates of deposits.
7
ONYX PHARMACEUTICALS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(unaudited)
NOTE 5. LINE OF CREDIT
In March 1997, the Company entered into a $7 million line of credit
arrangement which bears interest at prime plus 1%. The line, which
originally expired on October 15, 1997, has been extended to January 15,
1998. The line is secured by certain assets of the Company and contains
covenants related to maintaining debt-to-equity ratios, tangible net worth
minimums, cash and investment balances, as well as a restriction on paying
dividends or repurchasing stock. As of September 30, 1997, no balance was
outstanding on the line of credit.
8
ONYX PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THIS OVERVIEW AND THE
FOLLOWING DISCUSSION CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1996.
OVERVIEW
Since its inception, ONYX Pharmaceuticals, Inc. (the "Company" or "ONYX") has
been engaged in the discovery and development of novel therapeutics based
upon the genetics of human disease, with an emphasis on cancer. Currently,
the Company has five therapeutic discovery programs focused on the following
cancer mutations: p53, ras, cell cycle, BRCA1 and APC.
The Company intends to pursue its therapeutic discovery programs
independently and in collaboration with pharmaceutical companies, and to
collaborate with such companies on the development and commercialization of
any products which may result from the Company's discovery programs. The
Company has entered into collaborative agreements with Bayer Corporation
("Bayer") in the area of ras oncogenes, Warner-Lambert Company
("Warner-Lambert") in the cell cycle area and Eli Lilly and Company ("Eli
Lilly") on the function of the BRCA1 gene in breast cancer.
On July 31, 1997, the Company signed a three-year research and development
agreement with Warner-Lambert aimed at discovering new therapeutics to
regulate inflammation and autoimmunity. The Company believes that expanding
into the area of inflammation is a natural step for the Company because some
of the same biochemical pathways that lead to cancer also play an important
role in the development of inflammatory disorders. Terms of the agreement
provide for receipt by the Company of an up-front licensing fee payable in
three stages, as well as milestone payments and royalties on eventual product
sales. No license fees have been received as of September 30, 1997. In
return, Warner-Lambert receives exclusive worldwide marketing rights to
products emerging from the collaboration. Total payments to the Company
prior to commercialization could total nearly $30,000,000. Warner-Lambert
has the option to extend the research term from July 31, 2000 to July 31,
2001 provided that Warner-Lambert notifies the Company of the extension by
July 31, 1999. Warner-Lambert has the right to terminate the agreement at its
discretion on January 31, 1999 upon written notice, provided that research
payments to the Company are continued through July 31, 1999. In addition,
Warner-Lambert may terminate the research portion of the agreement, and
associated research funding and milestone payments, at its discretion if a
project director acceptable to Warner-Lambert has not been hired by ONYX
prior to January 31, 1998.
During the quarter ended September 30, 1997, the Company updated the results
from a Phase I human safety study of its ONYX-015 anticancer virus in
patients with recurrent and refractory head and neck tumors to include the
results from patients who had received multi-day dosing. The Company is
currently conducting Phase II studies of ONYX-015 as a single agent in
patients with recurrent and refractory tumors of the head and neck. Three
Phase I trials are also underway, including pancreatic and ovarian cancers,
and gastrointestinal cancers that have metastasized to the liver. In October
1997, the Company opened a Phase II clinical trial with ONYX-015 in
combination with two chemotherapeutic drugs. This clinical trial will
include head and neck cancer patients with recurrent disease who have not
previously received chemotherapy.
The Company has not been profitable since inception and expects to incur
substantial and increasing losses for the foreseeable future, primarily due
to the expansion of its research and development programs, including clinical
trials in the p53 program. The Company expects that losses will fluctuate
from quarter to quarter and that such fluctuations may be substantial. As of
September 30, 1997, the Company's accumulated deficit was $40,245,000.
9
ONYX PHARMACEUTICALS, INC.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996.
REVENUES
The Company's revenues decreased 26% to $1,890,000 and 4% to $6,190,000 for
the three and nine months ended September 30, 1997, respectively, as compared
to the same periods in 1996. Revenues for the 1996 periods were $2,558,000
and $6,432,000, respectively. Revenues for the three and nine months ended
September 30, 1997 and 1996 were attributable to amounts earned for research
performed under the Company's collaborations with Bayer, Warner-Lambert and
Eli Lilly. The decrease in revenues for the three and nine months ended
September 30, 1997 as compared to the same periods in 1996 is primarily due
to a milestone payment of $685,000 from Eli Lilly which was received and
recorded as revenue in the third quarter of 1996.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased 63% to $5,489,000 and 39% to
$14,469,000 for the three and nine months ended September 30, 1997,
respectively, as compared to the same periods in 1996. The increase was
primarily due to additional clinical costs associated with Phase I and Phase
II clinical trials of ONYX-015, the lead product in the Company's p53
program. The Company expects that research and development expenses will
continue to grow during future periods due to the hiring of personnel and the
aggressive clinical development plan for ONYX-015.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased 29% to $1,319,000 and 33% to
$3,912,000 for the three and nine months ended September 30, 1997,
respectively, as compared to the same periods in 1996. The increase was
primarily due to increased administrative staffing, additional costs incurred
in connection with corporate development activities and higher expenses
associated with the Company's reporting and other requirements associated
with operating as a publicly held company. General and administrative
expenses are expected to increase to support the Company's research and
development efforts.
NET INTEREST INCOME
The Company had net interest income of $511,000 and $1,533,000 for the three
and nine months ended September 30, 1997, respectively, as compared with
$581,000 and $1,043,000 for the same periods in 1996. For the three months
ended September 30, 1997, interest income decreased over the comparable
period in 1996 due to a lower average balance of cash, cash equivalents and
short-term investments. For the nine months ended September 30, 1997, the
increase in net interest income reflects the Company's higher average balance
of cash, cash equivalents and short-term investments following its initial
public offering of common stock in May 1996.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's cash expenditures have substantially exceeded
its revenues. The Company has relied primarily on the proceeds from the sale
of equity securities and revenue from collaborative research and development
agreements to fund its operations.
The Company's cash, cash equivalents and short-term investments were
$34,568,000 at September 30, 1997, compared with $40,329,000 at December 31,
1996. Increasing levels of clinical research and product development expenses
associated with ONYX-015, the lead product in the p53 program, and the higher
levels of general and administrative expenses resulted in $6,976,000 of cash
used in operations for the nine months ended September 30, 1997. This cash
decline was partially offset by Warner-Lambert's $3,333,000
10
ONYX PHARMACEUTICALS, INC.
purchase of 192,941 shares of common stock in May 1997. The Company expects
cash used in operations will continue to increase as clinical development of
ONYX-015 progresses.
Total capital expenditures for equipment and leasehold improvements for the
nine months ended September 30, 1997 were $1,549,000. The Company expects to
make expenditures of approximately $750,000 for the remainder of 1997 for
capital equipment and improvements to its existing facility.
The Company anticipates that its existing capital resources and interest
thereon, and anticipated revenues from its existing collaborations will be
sufficient to fund its current and planned operations through the end of
1998. There can be no assurance, however, that changes in the Company's
operating expenses will not result in the expenditure of such resources
before such time, and in any event, the Company will need to raise
substantial additional capital to fund its operations in future periods. As
of September 30, 1997, the Company had $7,000,000 available through a line of
credit which expires on January 15, 1998. No balance was outstanding on the
line of credit at September 30, 1997.
BUSINESS RISKS
The Company is at an early stage of development. The development of the
Company's technology and proposed products will require a commitment of
substantial funds to conduct these costly and time-consuming activities. All
of the Company's potential products are in research or development and will
require significant additional research and development efforts prior to any
commercial use, including extensive preclinical and clinical testing as well
as lengthy regulatory approval. The development of new products is subject
to a number of significant risks. Potential products that appear to be
promising at an early stage of development may not reach the market for a
number of reasons. Such risks include the possibilities that the potential
products will be found ineffective or unduly toxic during clinical trials,
fail to receive necessary regulatory approvals, be difficult to manufacture
on a large scale, be uneconomical to market or be precluded from
commercialization by proprietary rights of third parties.
In addition, many of the Company's potential products are subject to
development and licensing arrangements with the Company's collaborators.
Therefore, the Company is dependent on the research and development efforts
of these collaborators. Moreover, the Company is entitled to only a portion
of the revenues, if any, realized from the commercial sale of any of the
potential products covered by the collaborations. Should the Company or its
collaborators fail to perform in accordance with the terms of any of their
agreements or terminate such agreements without cause, any consequent loss of
revenue under the agreements could have a material adverse effect on the
Company's results of operations.
There can be no assurance that the Company will be able to maintain existing
collaborative agreements, negotiate collaborative arrangements in the future
on acceptable terms, if at all, or that any such collaborative arrangements
will be successful. To the extent that the Company is not able to maintain
or establish such arrangements, the Company would be required to undertake
such activities at its own expense.
The proposed products under development by the Company have never been
manufactured on a commercial scale, and there can be no assurance that such
products can be manufactured at a cost or in quantities necessary to make
them commercially viable. The Company has no sales, marketing or
distribution capability. If any of its products subject to collaborative
agreements are successfully developed, the Company must rely on its
collaborators to market such products. If the Company develops any products
which are not subject to collaborative agreements, it must either rely on
other large pharmaceutical companies to market such products or must develop
a marketing and sales force with technical expertise and supporting
distribution capability in order to market such products directly.
The Company intends to seek additional funding through collaborative
arrangements, public or private equity or debt financings, capital lease
transactions or other financing sources that may be available. However,
there can be no assurance that additional financing will be available on
acceptable terms or at all. If
11
ONYX PHARMACEUTICALS, INC.
additional funds are raised by issuing equity securities, substantial
dilution to existing stockholders may result. If adequate funds are not
available, the Company may be required to delay, reduce the scope of, or
eliminate one or more of its research or development programs or to obtain
funds through collaborative arrangements with others that are on unfavorable
terms or that may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would otherwise
seek to develop itself.
The foregoing risks reflect the Company's early stage of development and the
nature of its industry and proposed product. Also inherent in the Company's
stage of development is a range of additional risks, including competition,
uncertainties regarding protection of patents and proprietary rights,
government regulation and uncertainties regarding health care reform.
12
ONYX PHARMACEUTICALS, INC.
PART II: OTHER INFORMATION
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
The effective date of the registration statement for the Company's initial
public offering was May 8, 1996. The net proceeds from this initial public
offering were $31,159,241. The Company has used the proceeds through the
quarter ended September 30, 1997 as follows.
Direct or Indirect Payment to Others:
Construction of plant, building and facilities $ 762,450
Purchase and installation of machinery and equipment $ 1,801,249
Repayment of Indebtedness $ 583,029
Working Capital $ 27,489,362
Temporary Investment: Cash, Cash Equivalents and
Short-Term Investments $ 523,151
13
ONYX PHARMACEUTICALS, INC.
ITEM 5. OTHER INFORMATION
RESULTS OF ONYX-015 PHASE I CLINICAL TRIALS FOR HEAD AND NECK CANCER
Earlier this year, Onyx Pharmaceuticals announced results of a Phase I safety
trial of its lead anticancer viral therapy, ONYX-015, in patients with
recurrent and refractory head and neck tumors. ONYX-015 was found to be safe
and well-tolerated, as well as biologically active.
ONYX-015 is a genetically engineered adenovirus that, in prior preclinical
studies, has been shown to efficiently 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 cancer cases, including more than 70 percent of recurrent
and refractory cancers of the head and neck. ONYX-015 viral replication may
not be solely dependent on abnormal p53 sequence, but more broadly on lack or
alteration of p53 function.
The primary objectives of this Phase I study were to determine the safety of
directly injecting ONYX-015 into tumors of the head and neck; to determine
the maximum tolerated dose; and to assess the safety of repeat treatment.
Patients in this study had previously received a range of treatments
including surgery, radiation and chemotherapy, individually or in
combination. The treated tumors ranged in cross-sectional area from 1 cm2 to
80 cm2, with a mean of 17 cm2 and median of 14 cm2.
Two dosing regimens were utilized. The first 19 patients received a single,
direct intratumoral injection, that could be repeated every 28 days for
patients whose tumors did not progress after the first injection. Later, an
additional nine patients received direct intratumoral injections daily over
five days, also with the option of repeat treatment. A final cohort of four
patients received a single direct intratumoral injection at the highest
feasible dose level to confirm that the desired dose level for Phase II
trials is within an acceptable safety margin for virus dosing. A total of
thirty-two patients were treated in the Phase I trial, of which eleven
patients received repeat treatments. ONYX-015 was well-tolerated and
investigators observed no dose-limiting toxicities. Mild, transient flu-like
symptoms were observed in approximately 30% of the single dose patients and
in approximately 60% of the multiple dose patients.
Researchers also studied the ability of ONYX-015 to replicate in tumors, as
well as the local and systemic immune response to the virus. Viral
replication was detected in two of thirteen patients with evaluable biopsies
on the single dose regimen, and in four of four patients with evaluable
biopsies on the multiple dose regimen, six or seven days following injection.
Approximately 70 percent of the 28 patients tested entered the study with
neutralizing antibodies to the adenovirus; some of these patients experienced
tumor necrosis. After treatment, all patients in the study had neutralizing
antibodies, including those patients who had tumor necrosis.
While the focus of this study was safety, the effect of injection on tumor
growth was a secondary objective of the study. Of the 23 patients receiving
single injection treatment, three experienced more than 50 percent reduction
in the size of their injected tumors, with one patient experiencing a greater
than 70 percent decrease. An additional three patients had significant
necrosis (greater than 30%) of their injected tumors. Several patients
experienced lesser degrees of tumor necrosis, including six whose tumors were
stable and non-progressive following treatment. In comparison, of the nine
patients treated with the virus daily for five days three experienced more
than 50 percent reduction in the size of their injected tumors, with one
patient experiencing a greater than 70 percent decrease lasting over six
months. An additional three patients had significant necrosis of their
injected tumors, and one patient's tumor was non-progressive following
treatment. In addition, tumor necrosis was associated with clinical benefit
in some of the patients, including decreased pain, improved ability to
swallow and improved speech. Necrosis was observed primarily in the tumor
tissue surrounding the site of injection.
14
ONYX PHARMACEUTICALS, INC.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 10.19* Amended and Restated Research, Development
and Marketing Collaboration Agreement dated
as of May 2, 1995 between the Registrant and
Warner-Lambert Company
Exhibit 10.20* Research, Development and Marketing Collaboration
Agreement dated as of July 31, 1997 between the
Registrant and Warner-Lambert Company
Exhibit 10.21 Addendum to Credit Terms and Conditions dated
March 10, 1997 between the Registrant and
Imperial Bank.
Exhibit 11.1 Statement Regarding Computation of Net Loss Per
Share
Exhibit 27.1 Financial Data Schedule
b) Form 8-K
No reports on Form 8-K were filed during the period covered by
this report.
* Confidential Treatment Requested
15
ONYX PHARMACEUTICALS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONYX PHARMACEUTICALS, INC.
Date: November 14, 1997 By:/s/ Hollings C. Renton
----------------------
Hollings C. Renton
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: November 14, 1997 By:/s/ Douglas L. Blankenship
--------------------------
Douglas L. Blankenship
Treasurer
(Principal Financial and Accounting Officer)
16
ONYX PHARMACEUTICALS, INC.
EXHIBIT INDEX
Sequentially
Numbered
Exhibit Number Description of Exhibits Page
- -------------- ----------------------- ----
10.19* Amended and Restated Research, Development and Marketing
Collaboration Agreement dated as of May 2, 1995 between the
Registrant and Warner-Lambert Company
10.20* Research, Development and Marketing Collaboration Agreement
dated as of July 31, 1997 between the Registrant and Warner-
Lambert Company
10.21 Addendum to Credit Terms and Conditions dated March 10, 1997
between the Registrant and Imperial Bank
11.1 Statement Regarding Computation of Net Loss per Share
27.1 Financial Data Schedule
* Confidential Treatment Requested
17