Precious Mettle

Jul 01, 2011

Coming up on its 20th anniversary as a midsize biopharma company focused on innovative cancer therapies, Onyx Pharmaceuticals today faces that awkward transition from adolescence to adulthood. This year, the company's prime asset—Nexavar, comarketed and developed with Bayer—is likely to become a blockbuster drug, a significant milestone in itself at a time when the blockbuster model is fraying as a driver of organic growth. The company holds a cash reserve of nearly $600 million, ready to deploy for the right deal, and recently cut the tape on a new, high-profile headquarters next to the fabled Genentech facilities in South San Francisco. But the truly transformative element, the one that could validate the strategy of CEO Tony Coles and take the company to the next level, resides in another next-generation breakthrough cancer product: carfilzomib. It's the company's key bet on the future and the outcome depends heavily on the pace of the expected NDA filing in the next few months, followed by accelerated FDA approval in 2012.

"Tony has done a good job in acquiring carfilzomib, instead of having the company totally rely on Nexavar," says Howard Liang, managing director, biotechnology analyst, at Leerink Swann. Carfilzomib, along with two other compounds, arrived through the acquisition of Proteolix, a deal done in 2009, Coles' second year on the job. Liang says the deal was "structured right," with the largest payment hinging on commercial approval.

A selective proteasome inhibitor for multiple myeloma, carfilzomib could get that crucial marketing authorization as early as next year. Some analysts are whispering about the drug's blockbuster potential. A carfilzomib approval would augur well for additional success; with an orally formulated proteasome inhibitor in the pipeline, Onyx could bring a franchise to bear on one of the most deadly forms of blood cancer. "I think investors are primarily interested in the different applications of carfilzomib ... there's a lot they can do with that franchise," says Liang. "But I think the company has a fair amount of work to do."

"This sounds cliché, but I do mean it: I really don’t know how you put a price on additional time for someone’s life."
Onyx's desire to develop and sell its proteasome inhibitor therapies in-house is a departure from the strategy of Hollings Renton, Coles' immediate predecessor. Where Renton was content to make his mark in early discovery, letting companies like Bayer and Pfizer juggle the intricacies of later-stage development and commercialization, Coles is determined to keep his products in the family, at least to the extent that he can. "Now that cancer has become such a hot area, we have no lack of pharmaceutical companies that are interested in helping us with geographic expansion," he says. "We can scale it in the US, and we can probably scale it in the Western markets." Self-commercialization, in Coles' view, is Onyx's step stool.

Sales of oncologic drugs grew by 6.7 percent in 2010, to $56 billion—the biggest single market segment—but most companies don't succeed by virtue of market opportunity alone. Coles' focus on the cancer space, and his decision to channel resources into blood cancer treatments in particular, stems in part from his personal experience with the disease; his eldest son was diagnosed with non-Hodgkin's lymphoma at the age of 13. That emotional connection demonstrates that succeeding in this business is not only about PowerPoint presentations; it's also about passion. In fact, Coles' elevator speech about Onyx emphasizes "transformation" geared to making progress against unmet medical need. "If we can transform the profile of cancer through new therapies, we will transform our company as well," Coles told Pharm Exec. "As we unlock the understanding of cancer and make it a chronic condition"—as opposed to a uniformly fatal one—"then we will have the opportunity to transform peoples' lives. That pays back to the company and what we do on behalf of our customers and shareholders."

Onyx launched a new corporate logo in March, a circle or sphere comprised of two three-dimensional curls reflecting a theme of "convergence:" dedication to science linked to a compassion for patients. The theme plays forward around the company's three key business objectives: assisting Bayer in building Nexavar's commercial growth and supporting new clinical investigations; advancing clinical development on carfilzonib; and working on its pipeline with a focus on near- and long-term growth potential.

Onyx's current executive team was mostly brought on after Coles became CEO. Matthew Fust, EVP and chief financial officer, joined the company in 2009, from Jazz Pharmaceuticals. Juergen Lasowski, EVP, corporate development and strategy, was a colleague of Coles at NPS Pharmaceuticals. He joined two months after Coles' arrival. Ted Love, in charge of the crucial task of clinical development, joined Onyx in 2010, having worked at Genentech for six years.

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