UPDATE 2-Onyx to acquire private biotech for $276 million
* Onyx acquiring Proteolix Inc
* Proteolix has blood cancer drug in mid-stage trials
* Onyx may pay $535 mln more on milestone achievements
* Onyx shares up more than 7 pct (Updates with share move)
By Bill Berkrot and Jessica Hall
NEW YORK/PHILADELPHIA, Oct 12 (Reuters) - Onyx Pharmaceuticals Inc (ONXX.O) said on Monday it has agreed to buy Proteolix Inc, a privately held biotechnology company developing cancer drugs, for an upfront cash payment of $276 million, sending its shares up more than 7 percent.
Proteolix's lead drug candidate, carfilzomib, is currently in mid-stage clinical trials for patients with relapsed and refractory multiple myeloma, a common type of blood cancer. The compound may have additional opportunities for the treatment of solid tumor cancers as well, Onyx said.
Under the deal's terms, Onyx could pay up to an additional $535 million, based on achievement of various development and regulatory approval milestones, including $170 million for accelerated approval by the U.S. Food and Drug Administration.
Onxy, which sells the liver and kidney cancer medicine Nexavar along with Bayer AG (BAYGn.DE), has no other current acquisition plans and will focus on integrating Proteolix over the near term, Onyx Chief Executive Tony Coles said.
"This is a significant transaction for us. This is what we're most focused on right now," Coles said in an interview.
"It's a perfect fit with Onyx. We're successful in developing, they are successful in discovery. We can help them with development," Coles said. "We have been monitoring a number of oncology compounds over the past year. Proteolix is the right fit."
The deal is expected to close in the fourth quarter, Onyx said. Onyx expects regulatory approval for carfilzomib to take 24 to 36 months.
An ongoing 250-patient Phase 2b trial of carfilzomib in relapsed and refractory multiple myeloma is expected to complete enrollment in 2009, with data anticipated in the second half of 2010, Onyx said.
A late-stage, or Phase III, multiple myeloma study combining carfilzomib with Celgene Inc's (CELG.O) cancer drug Revlimid and the anti-inflammatory steroid dexamethasone is expected to begin next year, the company said.
More than 180,000 people are living with multiple myeloma worldwide, with about 86,000 new cases diagnosed annually, Onyx said.
"There is a tremendous need for new agents in multiple myeloma that can extend and improve the lives of patients and be used in combination with existing therapies," Todd Yancey, vice president of clinical development at Onyx, said in a statement.
"Current therapies are limited by serious side effects, particularly neurotoxicity, as well as limited duration of response and resistance," Yancey added.
Carfilzomib could generate peak sales of roughly $1 billion annually, but it is too early to predict when the drug would reach that sales level, Coles said.
Nexavar had sales of $201 million in the second quarter. Onyx expects Nexavar sales to hit $875 million this year and $1 billion in 2010, Coles said.
Onyx expects the Proteolix acquisition to add $5 million of incremental costs to its research and development budget for 2009, and $25 million in incremental costs next year, Coles said.
The drug is also undergoing early stage studies for solid tumor cancers.
Onyx shares were up $1.94 at $28.84 in late morning trade on Nasdaq. They were as high as $29.20 earlier in the session. (Reporting by Bill Berkrot in New York and Jessica Hall in Philadelphia; Editing by Jan Paschal, Dave Zimmerman)
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