Letter to shareholder: Is any one still holding it.
This does not sound good and explains the decline and damping or this stock
Thursday February 28, 9:30 pm Eastern Time
Press Release
SOURCE: Onyx Pharmaceuticals, Inc.
Onyx Pharmaceuticals Releases Letter to Shareholders
RICHMOND, Calif., Feb. 28 /PRNewswire-FirstCall/ -- Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX - news) released today the following letter to its shareholders which is expected to be distributed with the 2001 annual report in April.
Dear Shareholders:
Onyx has made major changes to its portfolio and business structure. With two products in clinical development and to ensure that both products are developed successfully, we restructured the company to reduce our early stage research programs while increasing our development efforts and capabilities. As a result of encouraging results to date, Onyx will increase investment in BAY 43-9006 to move the program into comprehensive Phase II trials. On the other hand, significant challenges have slowed the momentum on development of ONYX-015.
In preclinical studies, BAY 43-9006 has demonstrated activity in inhibiting abnormal growth signaling in cancer. We believe that this approach of disrupting biochemical signals that make tumors grow represents an exciting potential for development of a new class of cancer treatment. Two new drugs using this approach were recently approved for marketing. We believe that the best return on our resources could come from positive Phase II data that will allow us to improve our ability to access capital.
To date, ONYX-015 has produced positive Phase II clinical data in head and neck cancer. However, since we had not established a large-scale manufacturing process and our original partner for this program had been acquired subsequent to establishing our collaboration, the progress in the development of ONYX-015 has been delayed. To avoid further delays, we established a source of manufacturing in collaboration with XOMA (U.S.) LLC in January 2001. In addition, we reacquired rights from our collaboration partner to advance the product development in head and neck cancer and to further develop indications where local or regional administration of ONYX-015 would be feasible. Since Onyx reacquired the rights, we have held discussions with the FDA in order to seek guidance on a plan of action to further advance the program. As a result of these developments, we have determined that there are several milestones that Onyx must achieve for this product to advance towards registration. First, additional batches of product must be made consistently using the large-scale manufacturing process at XOMA. Although the manufacturing process at XOMA remains under development, we expect materials from XOMA for clinical studies after mid-2002. Additionally, we must reach agreement with the FDA on what clinical trials and endpoints could lead to marketing approval in the U.S. Until these milestones are met, we will not accelerate the ongoing Phase III trial or launch additional pivotal trials.
The delay in the trials for ONYX-015 will reduce our planned expenditures on this program in 2002. We will increase our co-funding of BAY43-9006 in 2002 and, as a result, our overall financial plan for the year and prior financial guidance provided to investors will not change.
BAY 43-9006
BAY 43-9006 is a result of the long-standing discovery and development collaboration between Onyx and Bayer that began in 1994. The focus of the collaboration has been to identify and develop compounds that inhibit inappropriate growth signaling in the ras pathway. BAY 43-9006 is the first product that has entered the clinic from this collaboration. Preclinical data suggest that BAY 43-9006 is a potent, selective and orally active inhibitor of a specific enzyme in this growth signaling pathway.
Clinical trials for BAY 43-9006 started in 2000. To date, data have been presented showing encouraging results at modest doses during the dose-escalation portion of the Phase I studies. Specifically, side effects like skin rashes and diarrhea were observed and there was biochemical evidence supporting the mechanistic approach. Several abstracts have been submitted to ASCO 2002 which will provide additional clinical data. We are excited by the Phase I data we have seen to date. We are increasing investment to support a comprehensive Phase II program targeting a range of tumors treating patients with BAY 43-9006 alone and in combination with chemotherapy.
There are two FDA approved products that disrupt the biochemical signals that make tumors grow. Herceptin(TM) is a monoclonal antibody that inhibits the HER2 receptor that is up-regulated in breast and ovarian cancer. Gleevec(TM) is a small molecule that inhibits an enzyme that causes excess growth in white blood cells that results in chronic myelogenous leukemia. In addition, there are compounds in late stages of clinical testing that target the EGF receptor. The receptor and the enzyme targets of these therapies activate the ras growth signaling pathway. In preclinical studies, BAY 43-9006 inhibits the ras signaling pathway, which is activated by growth factors and also by mutations in ras itself. Ras is mutated in 30 percent of human cancers and in 90 percent of pancreatic cancer and over 50 percent in colon and non-small cell lung cancer.
The co-development collaboration with Bayer results in Onyx funding 50 percent of the costs for development of BAY 43-9006. In return, Onyx has a 50/50 profit share in the United States where we can co-promote the product. Everywhere else in the world, except Japan, Onyx's share is somewhat less than 50 percent since Bayer has exclusive marketing rights. In Japan, Bayer funds the product and Onyx gets a royalty. Onyx will receive milestone-based loans of $5 million and $15 million when the product enters Phase II and III, respectively.
ONYX-015
We partnered ONYX-015 with Warner-Lambert in the fall of 1999. Subsequently, Pfizer acquired Warner-Lambert in the summer of 2000 and Warner-Lambert's emphasis on ONYX-015 development shifted from head and neck cancer to cancers requiring systemic or intravenous (I.V.) therapy. In order to refocus the program on the original objective of commercializing in head and neck cancer, we revised our agreement to assume full responsibility for commercialization in head and neck cancer, and other cancers that could be treated by local or regional routes of administration. Warner-Lambert continues to have the right to develop ONYX-015 in I.V. applications.
The most significant impact to the program of Warner-Lambert's change in emphasis was its decision not to move forward with its original plan to invest in large-scale manufacturing. As a result, Onyx entered into an agreement in January 2001 with XOMA to produce ONYX-015 using a large-scale manufacturing process. Although we moved quickly to establish this collaboration, it was not initiated until fifteen months after the original Warner-Lambert agreement. Combined with the difficulties experienced in the development of a large-scale manufacturing process, this delay has severely restricted the availability of material for clinical trials. Therefore, we have had to limit the rate of patient accruals by restricting the number of Phase III clinical trial sites to five centers. Although the large-scale process at XOMA remains under development, we expect materials to be available from XOMA after mid-2002 that will allow us to accelerate the trial.
In addition, since Onyx transferred the IND to Warner-Lambert, Onyx had not met with the FDA since the fall of 1999. Upon reacquiring the rights, we reinitiated discussions with the FDA in late 2001. Since the FDA prefers two studies to support registration, we have proposed a second trial in refractory head and neck cancer to support registration in head and neck cancer. These discussions with the FDA are ongoing. In addition, we are providing to the FDA, up-to-date information on ONYX-015 nonclinical and clinical development as well as on the large-scale process development at XOMA.
As a result of these developments, we will not expand the larger Phase III trial to additional sites or initiate other pivotal trials until the company meets the following milestones:
-- Successfully manufacture additional batches of ONYX-015 at XOMA
-- Submit to the FDA Chemistry, Manufacturing and Control (CMC) amendment
to use the XOMA material in clinical trials
-- Gain alignment with the FDA for the studies that are necessary to
achieve marketing approval
Additional Product Candidates
We have had to limit our efforts on earlier research activities as a result of shifting the focus to development. However, our portfolio approach and the leverage from the development and financial resources of our corporate partners are yielding additional product candidates.
Together with Warner-Lambert, we are in late stages of preclinical testing to evaluate the first of our armed therapeutic viruses. This novel extension of our platform adds a gene to the virus that produces a specific protein as the virus selectively replicates in tumor cells. The first such gene is cytosine deaminase (CD) which encodes an enzyme that converts an inactive, prodrug 5-fluorocytosine to the toxic chemotherapeutic 5-fluorourocil at the site of the tumor. We should have the necessary data in the next year to determine whether the product should be advanced into the clinic. We are also collaborating with Sangamo BioSciences, Inc. in developing an armed therapeutic virus that incorporates a gene to turn on the expression of an immune system stimulant, GM-CSF.
Finally, as a result of the small molecule collaborations with Warner-Lambert, we are optimistic that additional product candidates could be selected for clinical development in the next year.
Positioned for Success
Given the recent conditions in the financial markets, we have had to prioritize our spending to focus on getting clinical results. In particular, we see the best return on our resources in the coming year from additional clinical data for BAY 43-9006. We believe positive Phase II data could enhance our ability to access capital to advance our portfolio of products. In the meantime, we are dedicated to advancing ONYX-015 by solving the manufacturing challenges with XOMA and obtaining full concurrence with the FDA before forging ahead with registration studies. In addition, we will continue to pursue a mix of corporate partnering deals and other financing to meet our cash requirements going forward.
Onyx is fortunate to have a portfolio of first-in-class products in the clinic or approaching the clinic. We should expand from two products in the clinic to three by year-end. This is the realization of a series of discovery programs targeting cancer at the molecular level.
We enter 2002 with the above revised objectives. I would like to thank all the employees of Onyx, along with our board members, partners, affiliates and stockholders for their dedication and contributions. Together, we will develop products that make a difference in cancer patients' lives.
Sincerely,
Hollings C. Renton
Chairman and CEO
Onyx Pharmaceuticals is engaged in the discovery and development of novel cancer therapies. Based on its proprietary technologies that target the molecular basis of cancer, the company is developing its lead products, ONYX-015 and BAY 43-9006. For more information about the company's pipeline and activities, visit Onyx's website at www.onyx-pharm.com.
This press release contains certain forward-looking statements regarding the development of potential human therapeutic products that involve a number of risks and uncertainties. Actual events may differ from the company's expectations. In addition to the matters described in this press release, the timeline for clinical activity, results of pending or future clinical trials, and changes in the status of the company's collaborative relationships, as well as the risk factors listed from time to time in the company's periodic reports filed with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K, may affect the actual results achieved by the company.
SOURCE: Onyx Pharmaceuticals, Inc. |
