Onyx will acquire Proteolix and its blood cancer drug candidate in deal worth up to $851M

Onyx Pharma will pay up to $851M for Proteolix

NEW YORK — Onyx Pharmaceuticals Inc. said Monday it will buy cancer drug developer Proteolix Inc. in a deal that could be worth as much as $851 million.

Onyx shares advanced $1.36, or 5.1 percent, to close at $28.26.

Onyx will pay $276 million upfront for the privately held South San Francisco company, and in the process it gains Proteolix’s cancer drug candidate carfilzomib, which is being tested as a treatment for multiple myeloma, non-Hodgkin lymphoma, and solid tumors. Its drugs are designed to trigger cancer cell death with minimal damage to the rest of the patient’s body.

Onyx, of South San Francisco, will pay another $40 million next year if carfilzomib reaches a development milestone, and will pay an additional $535 million if carfilzomib is approved in the U.S. and Europe. That includes a $170 million payment if the Food and Drug Administration decides to conduct a fast review of the drug.

The deal is expected to close in the fourth quarter. Onyx, which makes the liver and kidney cancer drug Nexavar, said the purchase will help it expand into blood cancers. It estimated the market for those diseases is worth $16 billion.

The acquisition gives Onyx a deeper pipeline of drugs in the middle stages of human testing: it did not have any drugs in midstage or late-stage clinical trials other than Nexavar. It is testing Nexavar as a primary, secondary, or later treatment for cancers of the liver, kidney, lungs, breast, ovaries and colon.

Proteolix is conducting midstage clinical trials of carfilzomib as a standalone treatment for multiple myeloma, which is a cancer of the blood. It expects data from that study in late 2010, and the companies may file for Food and Drug Administration marketing approval by the end of that year.

Carfilzomib works similarly to Johnson & Johnson’s myeloma drug Velcade, Onyx said. Proteolix is working on a second drug of the same type that could be taken orally, unlike Velcade and carfilzomib, which are given intravenously. Onyx said the drugs don’t have some of the typical side effects of chemotherapy, like hair loss.

Next year, the companies expect to begin a late-stage trial of carfilzomib, Revlimid and the corticosteroid dexamethasone as a treatment for multiple myeloma, Onyx said. The trial will involve patients whose cancer has not responded to other therapies, or has returned after previous treatments.

Proteolix is also conducting midstage trials of carfilzomib as a treatment for solid tumors. The company is also doing research on compounds that would treat inflammatory and autoimmune diseases like rheumatoid arthritis and systemic lupus. Those drugs are intended to treat abnormal inflammation without affecting normal cells, Onyx said.