Onyx Pharmaceuticals has signed an agreement to acquire fellow California-based firm Proteolix in a deal worth up to $851 million.

Under the terms of the deal, Onyx will make a $276 million cash payment to Proteolix but most of the value of the agreement depends on the progress of the latter’s lead compound carfilzomib. The proteasome inhibitor is currently in “multiple clinical trials”, the companies noted, including an advanced Phase IIb studies for patients with relapsed and refractory multiple myeloma.

The other $575 million is contingent upon the achievement of certain regulatory approvals for carfilzomib and specifically $170 million of that sum is based upon the achievement of accelerated approval by the US Food and Drug Administration. The transaction is expected to close in the fourth quarter.

A New Drug Application for carfilzomib, which to date has shown low rates of observed neurotoxicity, a side effect of currently-approved proteasome inhibitors is expected to be filed by the end of 2010. Next year will also see the start of a Phase III trial evaluating carfilzomib in combination with Celgene’s multiple myeloma drug Revlimid (lenalidomide) and dexamethasone.

In addition, carfilzomib is being evaluated in a Phase II study in relapsed patients with multiple myeloma and a Phase Ib/II trial for solid tumour cancers. Proteolix is also developing an oral proteasome inhibitor and a selective inhibitor of the immunoproteasome.

Onyx chief executive Anthony Coles said that carfilzomib has a “proven and well-validated mechanism of action, strong efficacy signals, demonstrated tolerability and a potential accelerated approval pathway,” He added that the Proteolix acquisition leverages his company’s “proven expertise in developing and commercialising Nexavar (sorafenib), the big-selling liver and cancer drug partnered with Bayer, and provides “strategic expansion into the $16 billion haematological malignancies market”.

Dr Cole added that the structure of the deal “reflects our approach to growing our business in a disciplined fashion” and “maintain our ability to continue to grow operating cash flow in 2010 and beyond”.
The purchase has gone down well with Onyx stockholders and the company’s shares ended the day up just over 5% at $28.26.