July 26, 2010

Forbes

Onyx's Next Blockbuster?

Onyx Pharmaceuticals' liver and kidney cancer drug Nexavar is closing in on a billion dollars in sales. But to succeed as a stand-alone biotech company in a world dominated by giants, the biotech company badly needs another hit.

It might just have one in carfilzomib. The company reported this morning promising, if not spectacular, results for the multiple myeloma drug in 266 patients who had failed all other treatments. The drug helped shrink tumors in 24% of them--good enough for Onyx to apply for FDA approval by year end, the company said.

The company reported the results in a conference call and says it will release details of the trial at a major medical meeting.

Dana Farber Cancer Institute’s Kenneth Anderson called the results “very promising” and said that the drug appeared to have a “very safe side effect profile.”

In an interview, Onyx chief executive Tony Coles called the data “quite compelling” and said the drug had the potential to snag a billion dollars in annual sales eventually, if it is approved in both these very advanced patients and also for earlier-stage multiple myeloma. A trial in the earlier-stage patients is ongoing.

Onyx's believes that its drug may have less side effects than rival multple myeloma medication Velcade from Takeda, as it is a differenet. “You are really delivering the drug at a specific and concentrated fashion at the target location,” he said.

Onyx is one of the only stand-along biotech companies left that focus on the hot cancer market. Getting a second drug on the market could make it a target for big pharma companies who are desperate to expand their presence in the cancer drug arena. Eli Lilly, for example, bought out Imclone in 2008, out-bidding Bristol-Myers Squibb.

"It is something we cannot control--any larger company can come and make an offer," admits Coles. "We like our prospects. We do believe we can remain independent."

The results go a step towards vindicating Onyx’s acquisition of privately-held Proteolix for $816 million last year to obtain the drug. The deal had an unusual structure. Only $276 million was paid up-front, while the rest is contingent on achieving various milestones and approvals in multiple myeloma.

"It was a very good deal for us. We believe the structure of this kind of transaction is one of the new ways for the future," says Coles. He says other companies are interested in imitating the structure of the transaction.