##### 









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K




|  |                                                                                                                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED 
     DECEMBER 31, 2005.                                                               
| 
|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
    FROM                                     TO                                     .

Commission File No. 0-28298





Onyx Pharmaceuticals, Inc.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Delaware                                                           |  | 94-3154463                              
|(State or other jurisdiction of
    Incorporation or Organization) |  | (I.R.S. Employer
    Identification No.)

2100 Powell Street


Emeryville, California 94608


(510) 597-6500


(Address, including zip code, and telephone number,


including area code, of registrants principal executive
offices)


Securities Registered Pursuant to Section 12(b) of the
Act: None


Securities Registered Pursuant to Section 12(g) of the
Act:


|                              |  |                                          
|----------------------------- |  | -----------------------------------------
|Title of Each Class           |  | Name of Each Exchange on Which Registered
|                              |  |                                          
|Common Stock $0.001 par value |  | Nasdaq National Market                   

o þ


o þ


þ o


S-K 10-K 10-K. o


12b-2




| |                            |                      |                          | 
| | -------------------------- | -------------------- | ------------------------ | 
| | Large accelerated filer  o | Accelerated filer  þ | Non-accelerated filer  o | 

12b-2 o þ














---



##### 



DOCUMENTS INCORPORATED BY REFERENCE


10-K.







|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Excludes 16,581,418 shares of Common Stock held by
    directors, officers and stockholders whose beneficial ownership
    exceeds 5% of the Registrants Common Stock outstanding.
    The number of shares owned by stockholders whose beneficial
    ownership exceeds 5% was determined based upon information
    supplied by such persons and upon Schedules 13D and 13G, if any,
    filed with the SEC. Exclusion of shares held by any person
    should not be construed to indicate that such person possesses
    the power, direct or indirect, to direct or cause the direction
    of the management or policies of the Registrant, that such
    person is controlled by or under common control with the
    Registrant, or that such persons are affiliates for any other
    purpose.



---



##### 



PART I.


This Annual Report on
Form 10-K contains
forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These
statements involve known and unknown risks, uncertainties and
other factors that may cause our or our industrys results,
levels of activity, or achievements to differ significantly and
materially from that expressed or implied by such
forward-looking statements. These factors include, among others,
those set forth in Item 1A Risk Factors and
elsewhere in this Annual Report on
Form 10-K. In some
cases, you can identify forward-looking statements by
terminology such as may, will,
should, intend, expect,
plan, anticipate, believe,
estimate, predict,
potential, or continue, or the negative
of such terms or other comparable terminology.


Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, events, levels of activity, performance or
achievements. We do not assume responsibility for the accuracy
and completeness of the forward-looking statements. We do not
intend to update any of the forward-looking statements after the
date of this Annual Report on
Form 10-K to
conform these statements to actual results, unless required by
law.


Unless the context otherwise requires, all references to
the Company, Onyx, we,
our, and us in this Annual Report on
Form 10-K refer to
Onyx Pharmaceuticals, Inc.




|        |         
|------- | --------
|Item 1. | Business

Overview


changing the
way cancer is
treated tm.


®












---



##### 









change the way
cancer is treated tm




2



---



##### 



Our Product Candidates




|                                   |  |                                                                                                                                       |  |                                                                                                                              |  |                                                                          
|---------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------
|Product/Program                    |  | Technology                                                                                                                            |  | Indication                                                                                                                   |  | Current Status                                                           
|                                   |  |                                                                                                                                       |  |                                                                                                                              |  |                                                                          
|Nexavar (sorafenib) Tablets        |  | Small molecule inhibitor of tumor cell proliferation and
    angiogenesis, targeting RAF, VEGFR-2, PDGFR-ß, KIT, FLT- 3,
    and RET. |  | Advanced kidney cancer                                                                                                       |  | Approved in U.S. Applications pending in Europe and other
    territories
|                                   |  |                                                                                                                                       |  | Single-agent trial for liver cancer                                                                                          |  | Phase III                                                                
|                                   |  |                                                                                                                                       |  | Combination trials for metastatic melanoma                                                                                   |  | Phase III                                                                
|                                   |  |                                                                                                                                       |  | Combination trial for non-small cell lung cancer                                                                             |  | Phase III                                                                
|                                   |  |                                                                                                                                       |  | Various single-agent trials for kidney and liver cancer                                                                      |  | Phase II  some complete and some ongoing                                
|                                   |  |                                                                                                                                       |  | Combination trials for kidney and liver cancer, as well as
    metastatic melanoma                                           |  | Phase II                                                                 
|                                   |  |                                                                                                                                       |  | Single-agent trials for breast, non-small cell lung and other
    cancers                                                    |  | Phase II                                                                 
|                                   |  |                                                                                                                                       |  | Combination trials with standard chemotherapies for melanoma,
    colorectal, non-small cell lung, ovarian and other cancers |  | Phase II and Ib Extension                                                
|                                   |  |                                                                                                                                       |  | Additional combination trials with other anticancer agents                                                                   |  | Phase Ib                                                                 
|PD 332991 (licensed
    to Pfizer) |  | Small molecule inhibitor of cyclin-dependent kinase 4                                                                                 |  | Multiple cancer types                                                                                                        |  | Phase I                                                                  



| |        
| | -------
| | Nexavar



RAS


3



---



##### 







| |                         
| | ------------------------
| | Commercialization Status





| |                
| | ---------------
| | Clinical Trials



Kidney Cancer Program


Phase III in Kidney Cancer.












| |   |                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hypertension may occur early in the course of therapy and blood
    pressure should be monitored weekly during the first six weeks
    of therapy and treated as needed.                                                                       
|
| |  | Incidence of bleeding regardless of causality was
    15 percent for Nexavar vs. 8 percent for placebo and
    the incidence of treatment-emergent cardiac ischemia/infarction
    was 2.9 percent for Nexavar vs. 0.4 percent for
    placebo.

4



---



##### 





| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Most common treatment-emergent adverse events with Nexavar were
    diarrhea, rash/desquamation, fatigue, hand-foot skin reaction,
    alopecia, and nausea. Grade 3/ 4 adverse events were
    38 percent for Nexavar vs. 28 percent for placebo.
|
| |  | Women of child-bearing potential should be advised to avoid
    becoming pregnant and advised against breast-feeding.                                                                                                                             





Phase II Randomized Discontinuation Trial Results in
Kidney Cancer.




12-week




| |                     
| | --------------------
| | Liver Cancer Program

Phase III Trial.


Phase II Trial. time-to


5



---



##### 







| |                            
| | ---------------------------
| | Metastatic Melanoma Program

Phase III Trials.


Phase I/ II Trial.




| |                    
| | -------------------
| | Lung Cancer Program

Phase III Trial.


Phase I/ Phase II Trials.


6



---



##### 





Earlier Stage Clinical
Development


Phase II in Multiple Tumor Types.


Phase Ib in Combination with Anticancer Agents in
Multiple Tumor Types.


Phase I.




| |                   
| | ------------------
| | Cell Cycle Program





| |               
| | --------------
| | Virus Platform



Collaborations




| |      
| | -----
| | Bayer



7



---



##### 













| |               
| | --------------
| | Warner-Lambert



Research and Development




8



---



##### 





Marketing and Sales


point-of


Manufacturing






Patents and Proprietary Rights






9



---



##### 









Government Regulation








| |   |                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------
| |  | preclinical studies;                                                                                                 
|
| |  | the submission to the FDA of an IND that must become effective
    before human clinical trials may commence;        
|
| |  | adequate and well-controlled human clinical trials to establish
    the safety and efficacy of the product candidate;
|
| |  | the submission of an NDA to the FDA; and                                                                             
|
| |  | FDA approval of the NDA, including inspection and approval of
    the product manufacturing facility.                



10



---



##### 













| |   |                            
| | - | ---------------------------
| |  | manufacture of the product;
|
| |  | testing;                   
|
| |  | quality assurance;         
|
| |  | packaging;                 
|
| |  | storage;                   
|
| |  | documentation;             
|
| |  | record-keeping;            
|
| |  | labeling;                  
|
| |  | advertising; and           
|
| |  | marketing procedures.      



11



---



##### 







| |   |                                                
| | - | -----------------------------------------------
| |  | warning letters;                               
|
| |  | civil penalties;                               
|
| |  | criminal prosecution;                          
|
| |  | injunctions;                                   
|
| |  | seizure or recall of products;                 
|
| |  | total or partial suspension of production;     
|
| |  | refusal of the government to grant approval; or
|
| |  | withdrawal of approval of products.            







12



---



##### 





Competition


tm tm


interleukin-2


CCI-779, AG-013736,


13



---



##### 







| |   |                                              
| | - | ---------------------------------------------
| |  | product efficacy and safety;                 
|
| |  | availability of patients for clinical trials;
|
| |  | the timing and scope of regulatory approvals;
|
| |  | availability of supply;                      
|
| |  | marketing and sales capability;              
|
| |  | reimbursement coverage;                      
|
| |  | price; and                                   
|
| |  | patent position.                             

Employees




Company Information


http://www.onyx-pharm.com.


Available Information


10-K, 10-Q, 8-K, 10-K, 10-Q, 8-K 10-K 1-800-SEC-0330.


Code of Ethics




14



---



##### 





|         |             
|-------- | ------------
|Item 1A. | Risk Factors

In addition to the risks discussed in Business
and Managements Discussion and Analysis of Financial
Condition and Results of Operations, our business is
subject to the risks set forth below.


Nexavar®
(sorafenib) tablets is our only product, and we do not have
any other product candidates in Phase II or Phase III
clinical development. If Nexavar is not commercially successful,
we may be unable to identify and promote alternative product
candidates and our business would fail.


ONYX-015 ONYX-411,


Our clinical trial of Nexavar in kidney cancer may not
yield statistically significant overall survival data, which may
negatively impact the commercialization of Nexavar.






p-value P-values p-value


15



---



##### 





Nexavar has not been approved for sale outside of the
United States, and may never receive foreign marketing
approval.






There is a competing therapy approved for the treatment of
advanced kidney cancer, and we expect the number of approved
therapies could rapidly increase, which could harm the prospects
for Nexavar in this indication.




AG-013736, interleukin-2 (IL-2)


16



---



##### 





If our clinical trials fail to demonstrate that Nexavar is
safe and effective for cancer types other than kidney cancer, we
will be unable to broadly commercialize Nexavar as a treatment
for cancer, and our business may fail.










If serious adverse side effects are associated with
Nexavar, approval for Nexavar could be revoked, sales of Nexavar
could decline, and we may be unable to develop Nexavar as a
treatment for other types of cancer.






| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hypertension may occur early in the course of therapy and blood
    pressure should be monitored weekly during the first six weeks
    of therapy and treated as needed.                                                                         
|
| |  | Incidence of bleeding, regardless of causality, was
    15 percent for Nexavar vs. 8 percent for placebo and
    the incidence of treatment-emergent cardiac ischemia/infarction
    was 2.9 percent for Nexavar vs. 0.4 percent for
    placebo.

17



---



##### 





| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Most common treatment-emergent adverse events with Nexavar were
    diarrhea, rash/desquamation, fatigue, hand-foot skin reaction,
    alopecia and nausea. Grade 3/ 4 adverse events were
    38 percent for Nexavar vs. 28 percent for placebo.
|
| |  | Women of child-bearing potential should be advised to avoid
    becoming pregnant and advised against breast-feeding.                                                                                                                            





We are dependent upon our collaborative relationship with
Bayer to manufacture and to further develop and commercialize
Nexavar. There may be circumstances that delay or prevent the
development and commercialization of Nexavar.














18



---



##### 









| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | the amount and timing of resource expenditures can vary because
    of decisions by Bayer;                                    
|
| |  | possible disagreements as to development plans, including
    clinical trials or regulatory approval strategy;                
|
| |  | the right of Bayer to terminate its collaboration agreement with
    us on limited notice and for reasons outside our control;
|
| |  | loss of significant rights if we fail to meet our obligations
    under the collaboration agreement;                          
|
| |  | withdrawal of support by Bayer following the development or
    acquisition by it of competing products; and                  
|
| |  | possible disagreements with Bayer regarding the collaboration
    agreement or ownership of proprietary rights.               



If Bayers business strategy changes, it may
adversely affect our collaborative relationship.




Provisions in our collaboration agreement with Bayer may
prevent or delay a change in control.


co-development co-promotion


Our clinical trials could take longer to complete than we
project or may not be completed at all.






19



---



##### 





We face intense competition and rapid technological
change, and many of our competitors have substantially greater
managerial resources than we have.


tm tm






| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | developing products;                                             
|
| |  | undertaking preclinical testing and human clinical trials;       
|
| |  | obtaining FDA and other regulatory approvals of
    products; and
|
| |  | manufacturing and marketing products.                            







20



---



##### 









| |                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our operating results are unpredictable and may fluctuate.
    If our operating results are below the expectations of
    securities analysts or investors, the trading price of our stock
    could decline.





| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | We will need substantial additional funds, and our future
    access to capital is uncertain.





| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the size and complexity of our Nexavar program;                                                                                                        
|
| |  | decisions made by Bayer and Onyx to alter the size, scope and
    schedule of clinical development;                                                    
|
| |  | our receipt of milestone-based payments;                                                                                                               
|
| |  | progress with clinical trials;                                                                                                                         
|
| |  | the time and costs involved in obtaining regulatory approvals;                                                                                         
|
| |  | the cost involved in enforcing patent claims against third
    parties and defending claims by third parties (both of which are
    shared with Bayer);
|
| |  | the costs associated with acquisitions or licenses of additional
    products;                                                                         
|
| |  | competing technological and market developments; and                                                                                                   
|
| |  | global product commercialization activities.                                                                                                           



co-development


21



---



##### 



co-funding co-fund


If the specialty pharmacies and distributors that we and
Bayer rely upon to sell our products fail to perform, our
business may be adversely affected.






| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | not provide us with accurate or timely information regarding
    their inventories, the number of patients who are using Nexavar
    or complaints about Nexavar;
|
| |  | not effectively sell or support Nexavar;                                                                                                                         
|
| |  | reduce their efforts or discontinue to sell or support Nexavar;                                                                                                  
|
| |  | not devote the resources necessary to sell Nexavar in the
    volumes and within the time frames that we expect;                                                 
|
| |  | be unable to satisfy financial obligations to us or
    others; or                                                                                               
|
| |  | cease operations.                                                                                                                                                



We have a history of losses, and we expect to continue to
incur losses.


co-funding






| |                                                                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We do not have manufacturing expertise or capabilities and
    are dependent on Bayer to fulfill our manufacturing needs, which
    could result in lost sales and the delay of clinical trials or
    regulatory approval.

co-develop


22



---



##### 



scale-up,




| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | We have the right to
    co-promote Nexavar in
    the United States, but we do not have proven sales or marketing
    expertise.

co-promotion co-promote co-promotion co-promotion




| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We will be dependent on the efforts of Bayer to market and
    promote Nexavar in countries outside the United States where
    Nexavar may receive approval.

co-promotion co-promoting co-fund


co-promote








| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | If we lose our key employees and consultants or are unable
    to attract or retain qualified personnel, our business could
    suffer.



23



---



##### 









| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | We have rapidly expanded our sales and marketing
    operations, and any difficulties managing this growth could
    disrupt our operations.





| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | The market may not accept our products and pharmaceutical
    pricing and reimbursement pressures may reduce
    profitability.





24



---



##### 







| |   |                                                                                                 
| | - | ------------------------------------------------------------------------------------------------
| |  | rate of adoption by healthcare practitioners;                                                   
|
| |  | types of cancer for which the product is approved;                                              
|
| |  | rate of a products acceptance by the target population;                                        
|
| |  | timing of market entry relative to competitive products;                                        
|
| |  | availability of alternative therapies;                                                          
|
| |  | price of our product relative to alternative therapies;                                         
|
| |  | extent of marketing efforts by us and third-party distributors
    or agents retained by us; and
|
| |  | side effects or unfavorable publicity concerning our products or
    similar products.          



We are subject to extensive government regulation, which
can be costly, time consuming and subject us to unanticipated
delays.










| |   |                                                              
| | - | -------------------------------------------------------------
| |  | adversely affect the successful commercialization of Nexavar;
|
| |  | impose costly procedures on us;                              
|
| |  | diminish any competitive advantages that we may attain; and  
|
| |  | adversely affect our receipt of revenues or royalties.       



25



---



##### 



We may incur significant liability if it is determined
that we are promoting the off-label use of drugs or
are otherwise found in violation of federal and state
regulations in the United States or elsewhere.






We may not be able to protect our intellectual property
or operate our business without infringing upon the intellectual
property rights of others.






| |   |                                                                          
| | - | -------------------------------------------------------------------------
| |  | obtain patents;                                                          
|
| |  | license technology rights from others;                                   
|
| |  | protect trade secrets;                                                   
|
| |  | operate without infringing upon the proprietary rights of
    others; and
|
| |  | prevent others from infringing on our proprietary rights.                





26



---



##### 









We face product liability risks and may not be able to
obtain adequate insurance.








| |   |                                             
| | - | --------------------------------------------
| |  | decreased demand for a product;             
|
| |  | injury to our reputation;                   
|
| |  | withdrawal of clinical trial volunteers; and
|
| |  | loss of revenues.                           



Our stock price is volatile.




27



---



##### 







| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | interim or final results of, or speculation about, clinical
    trials from Nexavar;                           
|
| |  | changes in the regulatory approval requirements;                                                               
|
| |  | ability to accrue patients into clinical trials;                                                               
|
| |  | success or failure in, or speculation about, obtaining
    regulatory approval by us or our competitors;       
|
| |  | public concern as to the safety and efficacy of our product
    candidates;                                    
|
| |  | developments in our relationship with Bayer;                                                                   
|
| |  | developments in patent or other proprietary rights;                                                            
|
| |  | additions or departures of key personnel;                                                                      
|
| |  | announcements by us or our competitors of technological
    innovations or new commercial therapeutic products;
|
| |  | published reports by securities analysts;                                                                      
|
| |  | statements of governmental officials; and                                                                      
|
| |  | changes in healthcare reimbursement policies.                                                                  

Existing stockholders have significant influence over
us.






We are at risk of securities class action litigation due
to our expected stock price volatility.






| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | Provisions in Delaware law, our charter and executive
    change of control agreements we have entered into may prevent or
    delay a change of control.



28



---



##### 







| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the board of directors approved the transaction where the
    stockholder acquired 15 percent or more of the
    corporations stock;                                                                                                                                                                                                                                                                                                                                    
|
| |  | after the transaction in which the stockholder acquired
    15 percent or more of the corporations stock, the
    stockholder owned at least 85 percent of the
    corporations outstanding voting stock, excluding shares
    owned by directors, officers and employee stock plans in which
    employee participants do not have the right to determine
    confidentially whether shares held under the plan will be
    tendered in a tender or exchange offer; or
|
| |  | on or after this date, the merger or sale is approved by the
    board of directors and the holders of at least two-thirds of the
    outstanding voting stock that is not owned by the stockholder.                                                                                                                                                                                                                                                                     







| |   |                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our board is classified into three classes of directors as
    nearly equal in size as possible with staggered three-year terms;                                                                                        
|
| |  | the authority of our board to issue up to 5,000,000 shares
    of preferred stock and to determine the price, rights,
    preferences and privileges of these shares, without stockholder
    approval;                 
|
| |  | all stockholder actions must be effected at a duly called
    meeting of stockholders and not by written consent;                                                                                                       
|
| |  | special meetings of the stockholders may be called only by the
    chairman of the board, the chief executive officer, the board or
    ten percent or more of the stockholders entitled to vote at the
    meeting; and
|
| |  | no cumulative voting.                                                                                                                                                                                                   





Accounting pronouncements may affect our future financial
position and results of operations.




29



---



##### 





|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments





|        |           
|------- | ----------
|Item 2. | Properties







|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings





|        |                                                          
|------- | ---------------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Securities
    Holders



PART II.




|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities



|               |  |              |       |  |      |   |       |      |  |   |       |  |  |   |       | 
|-------------- |  | ------------ | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | - | ----- | 
|               |  | Common Stock |      
|               |  |              |      
|               |  | 2005         |       |  | 2004 |  
|               |  |              |       |  |      |  
|               |  | High         |       |  | Low  |   |       | High |  |   | Low   | 
|               |  |              |       |  |      |   |       |      |  |   |       | 
|First Quarter  |  | $            | 33.77 |  |      | $ | 25.30 |      |  | $ | 41.53 |  |  | $ | 28.75 | 
|Second Quarter |  |              | 33.46 |  |      |   | 23.70 |      |  |   | 58.75 |  |  |   | 37.80 | 
|Third Quarter  |  |              | 27.66 |  |      |   | 19.30 |      |  |   | 43.16 |  |  |   | 30.60 | 
|Fourth Quarter |  |              | 30.14 |  |      |   | 22.45 |      |  |   | 44.65 |  |  |   | 26.72 | 



Holders




Dividends




30



---



##### 



Securities Authorized for Issuance Under Equity Compensation
Plans as of December 31, 2005


|                                                       |  |                      |           |  |                      |   |                         |                           |  |  |           |    
|------------------------------------------------------ |  | -------------------- | --------- |  | -------------------- | - | ----------------------- | ------------------------- |  |  | --------- | ---
|                                                       |  | Number of            |           |  |                      |   | Number of securities    |                          
|                                                       |  | securities to be     |           |  |                      |   | remaining available for |                          
|                                                       |  | issued upon exercise |           |  | Weighted-average     |   |                         | future issuance under     | 
|                                                       |  | of outstanding       |           |  | exercise price of    |   |                         | equity compensation plans | 
|                                                       |  | options, warrants    |           |  | outstanding options, |   |                         | (excluding securities     | 
|Plan Category (1)                                      |  | and rights           |           |  | warrants and rights  |   |                         | reflected in column a)    | 
|                                                       |  |                      |           |  |                      |   |                         |                           | 
|                                                       |  | Column a             |           |  | Column b             |   |                         | Column c                  | 
|                                                       |  |                      |           |  |                      |   |                         |                           | 
|Equity compensation plans approved by security holders |  |                      | 3,806,081 |  |                      | $ | 21.17                   |                           |  |  | 3,649,049 | (2)






|    |                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------
|(1) | We have no equity compensation plans not approved by security
    holders.                                  
|   
|(2) | Of these securities, 38,588 shares remain available for
    purchase under our Employee Stock Purchase Plan.

Recent Sales of Unregistered Securities




Issuer Purchases of Equity Securities




31



---



##### 





|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data





|                                                              |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|------------------------------------------------------------- |  | ------------------------------------- | -------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                              |  | Year Ended December 31,               |         
|                                                              |  |                                       |         
|                                                              |  | 2005                                  |          |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                                              |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |        
|                                                              |  | (In thousands, except per share data) |         
|Statement of Operations Data:                                 |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total revenue                                                 |  | $                                     | 1,000    |   |      | $ | 500     |      |  | $ |        |   |  | $    | 2,715   |   |  | $ | 15,846  |  
|Operating expenses:                                           |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Research and development                                      |  |                                       | 63,120   |   |      |   | 35,846  |      |  |   | 32,059  |   |  |      | 43,604  |   |  |   | 39,530  |  
|Selling, general and administrative                           |  |                                       | 39,671   |   |      |   | 14,316  |      |  |   | 7,939   |   |  |      | 6,192   |   |  |   | 7,049   |  
|Restructuring                                                 |  |                                       |         |   |      |   | 258     |      |  |   | 5,530   |   |  |      |        |   |  |   | 812     |  
|                                                              |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |        
|Loss from operations                                          |  |                                       | (101,791 | ) |      |   | (49,920 | )    |  |   | (45,528 | ) |  |      | (47,081 | ) |  |   | (31,545 | )
|Interest and other income and expense, net                    |  |                                       | 6,617    |   |      |   | 3,164   |      |  |   | 559     |   |  |      | 1,294   |   |  |   | 3,973   |  
|                                                              |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |        
|Net loss                                                      |  | $                                     | (95,174  | ) |      | $ | (46,756 | )    |  | $ | (44,969 | ) |  | $    | (45,787 | ) |  | $ | (27,572 | )
|                                                              |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |        
|Basic and diluted net loss per share                          |  | $                                     | (2.64    | ) |      | $ | (1.36   | )    |  | $ | (1.73   | ) |  | $    | (2.23   | ) |  | $ | (1.50   | )
|                                                              |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |        
|Shares used in computing basic and diluted net loss per share |  |                                       | 36,039   |   |      |   | 34,342  |      |  |   | 25,953  |   |  |      | 20,535  |   |  |   | 18,385  |  
|                                                              |  |                                       |          |   |      |   |         |      |  |   |         |   |  |      |        

|                                                  |  |                |          |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   |          |  
|------------------------------------------------- |  | -------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | - |  | ---- | -------- | - |  | - | -------- | -
|                                                  |  | December 31,   |         
|                                                  |  |                |         
|                                                  |  | 2005           |          |   | 2004 |   |          | 2003 |  |   | 2002     |   |  | 2001 |         
|                                                  |  |                |          |   |      |   |          |      |  |   |          |   |  |      |         
|                                                  |  | (In thousands) |         
|Balance Sheet Data:                               |  |                |          |   |      |   |          |      |  |   |          |   |  |      |          |   |  |   |          |  
|Cash, cash equivalents, and marketable securities |  | $              | 284,680  |   |      | $ | 209,624  |      |  | $ | 105,400  |   |  | $    | 39,833   |   |  | $ | 58,466   |  
|Total assets                                      |  |                | 294,665  |   |      |   | 215,546  |      |  |   | 109,138  |   |  |      | 46,241   |   |  |   | 65,782   |  
|Working capital                                   |  |                | 241,678  |   |      |   | 197,873  |      |  |   | 92,826   |   |  |      | 28,727   |   |  |   | 48,669   |  
|Advance from collaboration partner                |  |                | 30,000   |   |      |   | 20,000   |      |  |   | 20,000   |   |  |      | 5,000    |   |  |   |         |  
|Accumulated deficit                               |  |                | (345,810 | ) |      |   | (250,636 | )    |  |   | (203,880 | ) |  |      | (158,911 | ) |  |   | (113,124 | )
|Total stockholders equity                        |  |                | 223,240  |   |      |   | 179,988  |      |  |   | 73,519   |   |  |      | 28,784   |   |  |   | 55,085   |  

32



---



##### 





|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

The following Managements Discussion and Analysis of
Financial Condition and Results of Operations contains
forward-looking statements that involve risks and uncertainties.
We use words such as may, will,
expect, anticipate,
estimate, intend, plan,
predict, potential, believe,
should and similar expressions to identify
forward-looking statements. These statements appearing
throughout
our 10-K are
statements regarding our intent, belief, or current
expectations, primarily regarding our operations. You should not
place undue reliance on these forward-looking statements, which
apply only as of the date of this Annual Report on
Form 10-K. Our
actual results could differ materially from those anticipated in
these forward-looking statements for many reasons, including
those set forth under Business Item 1A
Risk Factors and elsewhere in this Annual Report on
Form 10-K.


Overview


changing the
way cancer is
treated tm


®






Co-Promotion co-promotion




33



---



##### 



10-K.


Critical Accounting Policies and the Use of Estimates






Stock-Based Compensation:


Research and Development Expense:




34



---



##### 







Results of Operations




| |                                             
| | --------------------------------------------
| | Years Ended December 31, 2005, 2004 and 2003

Total Revenue. ONYX-015.


Research and Development Expenses.






35



---



##### 





10-K.


|                                |  |                                                                                                                                      |  |          |       |  |                        |                                                               |      |   |      |      |      |   |      |  |  |   |      | 
|------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | ----- |  | ---------------------- | ------------------------------------------------------------- | ---- | - | ---- | ---- | ---- | - | ---- |  |  | - | ---- | 
|                                |  |                                                                                                                                      |  |          |       |  |                        | Research and                                                  |     
|                                |  |                                                                                                                                      |  |          |       |  |                        | Development Expenses                                          |     
|                                |  |                                                                                                                                      |  |          |       |  |                        | for the year ended                                            |     
|                                |  |                                                                                                                                      |  |          |       |  |                        | December 31,                                                  |     
|                                |  |                                                                                                                                      |  | Collabo- |       |  | Phase of Development  |                                                               |      |  
|Product                         |  | Description                                                                                                                          |  | rator    |       |  | Estimated Completion   |                                                               | 2005 |   |      | 2004 |      |   | 2003 | 
|                                |  |                                                                                                                                      |  |          |       |  |                        |                                                               |      |   |      |      |      |   |      | 
|                                |  |                                                                                                                                      |  |          |       |  |                        | (In millions)                                                 |     
|Nexavar (sorafenib) Tablets (1) |  | Small molecule inhibitor of tumor cell proliferation and
    angiogenesis, targeting RAF, VEGFR-2, PDGFR-β, KIT, FLT-3,
    and RET. |  |          | Bayer |  |                        | Phase I  2004
    Phase II  Unknown
    Phase III  Unknown |      | $ | 62.1 |      |      | $ | 33.4 |  |  | $ | 19.4 | 
|Therapeutic Virus Programs (2)  |  | Programs discontinued during the second quarter of 2003. See
    Note 10 to our Financial Statements                                 |  |          |      |  |                        |                                                              |      |   | 1.0  |      |      |   | 2.4  |  |  |   | 12.7 | 
|                                |  |                                                                                                                                      |  |          |       |  |                        |                                                               |      |   |      |      |      |   |      | 
|                                |  | Total Research and Development Expenses                                                                                              |  | $        | 63.1  |  |                        | $                                                             | 35.8 |   |      | $    | 32.1 |  
|                                |  |                                                                                                                                      |  |          |       |  |                        |                                                               |      |   |     






|    |                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Aggregate research and development
    costs-to-date through
    December 31, 2005 incurred by Onyx since fiscal year 2000
    for the Nexavar project is $134.8 million.
|   
|(2) | Costs in 2005 were comprised of:                                                                                                                                         



| |    |                          
| | -- | -------------------------
| | a. | stock-based compensation;



| |    |                                                                                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b. | consulting fees for consultants retained in connection with the
    orderly wind-down of the virus programs and preservation of
    related assets for potential future divestiture or
    commercialization;



| |    |                                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------
| | c. | outside services related to stability testing and storage of
    virus product related to the programs.

Selling, General and Administrative Expenses.


36



---



##### 









Restructuring.




Interest Income, Net.


Other Expense  Related Party.


37



---



##### 





Other Income.


Income Taxes


10-K


Related Party Transactions




Liquidity and Capital Resources








38



---



##### 











Contractual Obligations and Commitments




|                                         |  |                        |  |           |     |  |       |        |       |   |     |         |  |   |   | 
|---------------------------------------- |  | ---------------------- |  | --------- | --- |  | ----- | ------ | ----- | - | --- | ------- |  | - | - | 
|                                         |  | Payments Due by Period
|                                         |  |                       
|                                         |  |                        |  | Less than |     |  | 1-3   |        | 3-5   |   |     | After  
|Contractual Obligations(1)               |  | Total                  |  | 1 Year    |     |  | Years |        | Years |   |     | 5 Years
|                                         |  |                        |  |           |     |  |       |        |       |   |     |        
|                                         |  | (In thousands)        
|Operating leases, net of sublease income |  | $2,378                 |  | $         | 547 |  |       | $1,136 |       | $ | 695 |         |  | $ |  | 

39



---



##### 








|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | This table does not include any payments under research and
    development collaborations, as the amount and timing of such
    payments are not known. This table also does not include the
    obligation to repay the $30.0 million creditable
    milestone-based payments that we received from Bayer as of
    December 31, 2005 or the additional $10.0 million we
    received in January 2006, because the repayment of these amounts
    is contingent upon Onyx generating profits or royalties on any
    products. Whether Onyx will ever generate any profits or
    royalties is not known at this time.



Recently Issued Accounting Standards


Share-Based Payment, Accounting for Stock-Based
Compensation, Statement of Cash Flows.




| |    |                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | A modified prospective method in which compensation
    cost is recognized beginning with the effective date
    (a) based on the requirements of FAS 123(R) for all
    share-based payments granted after the effective date and
    (b) based on the requirements of FAS 123 for all
    awards granted to employees prior to the effective date of
    FAS 123(R) that remain unvested on the effective date.
|
| | 2. | A modified retrospective method which includes the
    requirements of the modified prospective method described above,
    but also permits entities to restate based on the amounts
    previously recognized under FAS 123 for purposes of pro
    forma disclosures either (a) all prior periods presented or
    (b) prior interim periods of the year of adoption.                                         





40



---



##### 









41



---



##### 





|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market
    Risk

Interest Rate Risk






|                                  |  |          |                |            |                 |   |          |      |         |  |          |            |  |                 |                |  |      |   |       |  |  |  |      |  
|--------------------------------- |  | -------- | -------------- | ---------- | --------------- | - | -------- | ---- | ------- |  | -------- | ---------- |  | --------------- | -------------- |  | ---- | - | ----- |  |  |  | ---- | -
|                                  |  | 2005     |                |            | 2004            |  
|                                  |  |          |                |            |                 |  
|                                  |  |          |                | Average    |                 |   |          |      | Average | 
|                                  |  |          |                | Fair Value |                 |   | Interest |      |         |  |          | Fair Value |  |                 | Interest       | 
|                                  |  | Maturity |                |            | ($ in millions) |   |          | Rate |         |  | Maturity |            |  | ($ in millions) |                |  | Rate |  
|                                  |  |          |                |            |                 |   |          |      |         |  |          |            |  |                 |                |  |      |  
|Cash equivalents, fixed rate      |  |          | 0  2 months   |            |                 | $ | 45.4     |      |         |  | 3.97     | %          |  |                 | 0  2 months   |  |      | $ | 74.2  |  |  |  | 2.09 | %
|Marketable securities, fixed rate |  |          | 0  23  months |            |                 | $ | 238.6    |      |         |  | 4.66     | %          |  |                 | 0  16  months |  |      | $ | 135.4 |  |  |  | 2.18 | %





|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

10-K.




|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes In and Disagreements With Accountants on
    Accounting and Financial Disclosure





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures: 13a-15(e) 15d-15(e) 10-K


Managements Report on Internal Control over Financial
Reporting: 13a-15(f)


42



---



##### 







Changes in Internal Control over Financial Reporting:


Inherent Limitations on Effectiveness of Controls:


43



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















,








44



---



##### 



Item 9B. Other information




45



---



##### 



PART III.




|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant





|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation





|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters





|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions





|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services





PART IV.




|         |                                        
|-------- | ---------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules

(a) (1) Index to Financial Statements




| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | The Financial Statements required by this item are submitted in
    a separate section beginning on page 51 of this Report.
|
| | Report of Independent Registered Public Accounting Firm                                                                    
| | Balance Sheets                                                                                                             
| | Statements of Operations                                                                                                   
| | Statement of Stockholders Equity                                                                                          
| | Statements of Cash Flows                                                                                                   
| | Notes to Financial Statements                                                                                              

(2) Financial Statement Schedules




| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | Financial statement schedules have been omitted because the
    information required to be set forth therein is not applicable.

46



---



##### 



(3) Exhibits


|        |    |                         |  |                                                                                                                                                                                                                                                                                                                            
|------- | -- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 3  | .1(1)                   |  | Restated Certificate of Incorporation of the Company.                                                                                                                                                                                                                                                                      
|        | 3  | .2(1)                   |  | Bylaws of the Company.                                                                                                                                                                                                                                                                                                     
|        | 3  | .3(2)                   |  | Certificate of Amendment to Amended and Restated Certificate of
    Incorporation.                                                                                                                                                                                                                                         
|        | 4  | .1(1)                   |  | Reference is made to Exhibits 3.1, 3.2 and 3.3.                                                                                                                                                                                                                                                                            
|        | 4  | .2(1)                   |  | Specimen Stock Certificate.                                                                                                                                                                                                                                                                                                
|        | 4  | .4(1)                   |  | Amended and Restated Information and Registration Rights
    Agreement dated May 30, 1994 and as amended through
    May 16, 1995.                                                                                                                                                                                         
|        | 10 | .1(1)*                  |  | Collaboration Agreement between Bayer Corporation (formerly
    Miles, Inc.) and the Company dated April 22, 1994.                                                                                                                                                                                                         
|        | 10 | .1(i)(1)*               |  | Amendment to Collaboration Agreement between Bayer Corporation
    and the Company dated April 4, 1996.                                                                                                                                                                                                                    
|        | 10 | .2(1)*                  |  | Research, Development and Marketing Collaboration Agreement
    between Warner-Lambert Company and the Company, dated
    May 2, 1995.                                                                                                                                                                                     
|        | 10 | .2(i)(1)                |  | Waiver of Certain Rights under the Research, Development and
    Marketing Agreement by Warner-Lambert Company dated as of
    March 28, 1996.                                                                                                                                                                             
|        | 10 | .3(3)*                  |  | Technology Transfer Agreement dated April 24, 1992 between
    Chiron Corporation and the Company, as amended in the Chiron
    Onyx HPV Addendum dated December 2, 1992, in the Amendment
    dated February 1, 1994, in the Letter Agreement dated
    May 20, 1994 and in the Letter Agreement dated
    March 29, 1996.
|        | 10 | .4(1)+                  |  | Letter Agreement between Dr. Gregory Giotta and the Company
    dated May 26, 1995.                                                                                                                                                                                                                                        
|        | 10 | .5(1)+                  |  | 1996 Equity Incentive Plan.                                                                                                                                                                                                                                                                                                
|        | 10 | .6(1)+                  |  | 1996 Non-Employee Directors Stock Option Plan.                                                                                                                                                                                                                                                                            
|        | 10 | .7(1)+                  |  | 1996 Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                         
|        | 10 | .8(1)+                  |  | Form of Indemnity Agreement to be signed by executive officers
    and directors of the Company.                                                                                                                                                                                                                           
|        | 10 | .9(4)*                  |  | Amended and restated Research, Development and Marketing
    Collaboration Agreement dated May 2, 1995 between the
    Company and Warner-Lambert Company.                                                                                                                                                                 
|        | 10 | .10(4)*                 |  | Research, Development and Marketing Collaboration Agreement
    dated July 31, 1997 between the Company and Warner-Lambert
    Company.                                                                                                                                                                                    
|        | 10 | .11(4)*                 |  | Amendment to the Amended and Restated Research, Development and
    Marketing Collaboration Agreement, dated December 15, 1997,
    between the Company and Warner-Lambert Company.                                                                                                                                        
|        | 10 | .12(5)*                 |  | Amendment to Collaboration Agreement between Bayer Corporation
    and the Company dated February 1, 1999.                                                                                                                                                                                                                 
|        | 10 | .13(6)*                 |  | Collaboration Agreement between the Company and Warner-Lambert
    Company dated October 13, 1999 and effective
    September 1, 1999.                                                                                                                                                                                     
|        | 10 | .14(6)                  |  | Stock Put and Purchase Agreement between the Company and
    Warner-Lambert Company dated October 13, 1999 and effective
    September 1, 1999.                                                                                                                                                                            
|        | 10 | .15(6)                  |  | Stock Purchase Agreement between the Company and the investors
    dated January 18, 2000.                                                                                                                                                                                                                                 
|        | 10 | .16(4)*                 |  | Second Amendment to the Amended and Restated Research,
    Development and Marketing Agreement between Warner-Lambert and
    the Company dated May 2, 1995.                                                                                                                                                               
|        | 10 | .17(4)*                 |  | Second Amendment to Research, Development and Marketing
    Collaboration Agreement between Warner-Lambert and the Company
    dated July 31, 1997.                                                                                                                                                                        
|        | 10 | .18(7)+                 |  | Employment Offer Letter between Leonard E. Post, Ph.D. and
    the Company dated July 28, 2000.                                                                                                                                                                                                                            
|        | 10 | .19(13)+                |  | Form of Executive Change in Control Severance Benefits Agreement.                                                                                                                                                                                                                                                          

47



---



##### 



|        |    |                         |  |                                                                                                                                                                          
|------- | -- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |                        
|Number  |    | Description of Document
|        |    |                        
|        | 10 | .20(8)*                 |  | Amendment #1 to the Collaboration Agreement between the
    Company and Warner-Lambert dated August 6, 2001.                                                             
|        | 10 | .21(8)*                 |  | Amendment #3 to the Research, Development and Marketing
    Collaboration Agreement between the Company and Warner-Lambert
    dated August 6, 2001.                     
|        | 10 | .22(8)*                 |  | Amendment #3 to the Amended and Restated Research,
    Development and Marketing Collaboration Agreement between the
    Company and Warner-Lambert dated August 6, 2001.
|        | 10 | .23(9)                  |  | Stock and Warrant Purchase Agreement between the Company and the
    investors dated May 6, 2002.                                                                        
|        | 10 | .24(10)*                |  | Amendment to the Collaboration Agreement between the Company and
    Warner-Lambert Company dated September 16, 2002.                                                    
|        | 10 | .25(11)                 |  | Stock Purchase Agreement between the Company and the investors
    dated February 13, 2003.                                                                              
|        | 10 | .26(12)                 |  | Sublease between the Company and Siebel Systems dated
    August 5, 2004.                                                                                                
|        | 10 | .27(14)                 |  | 2005 Base Salaries for Named Executive Officers.                                                                                                                         
|        | 10 | .28(15)                 |  | Onyx Pharmaceuticals, Inc. 2005 Equity Incentive Plan.                                                                                                                   
|        | 10 | .29(16)                 |  | Separation Agreement between Onyx Pharmaceuticals, Inc. and
    Leonard E. Post, Ph. D., dated December 5, 2005.                                                         
|        | 23 | .1                      |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                
|        | 24 | .1                      |  | Power of Attorney. Reference is made to the signature page.                                                                                                              
|        | 31 | .1                      |  | Certification required by Rule 13a-14(a) or
    Rule 15d-14(a).                                                                                                          
|        | 32 | .1                      |  | Certifications required by Rule 13a-14(b) or
    Rule 15d-14(b)and Section 1350 of Chapter 63 of
    Title 18 of the United States Code (18 U.S.C. 1350).                






|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|*   | Confidential treatment has been received for portions of this
    document.                                        
|   
|+   | Indicates management contract or compensatory plan or
    arrangement.                                             
|   
|(1) | Filed as an exhibit to Onyxs Registration Statement on
    Form SB-2 (No.
    333-3176-LA).                       
|   
|(2) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended June 30, 2000.           
|   
|(3) | Filed as an exhibit to Onyxs Annual Report on
    Form 10-K for the
    year ended December 31, 2001.             
|   
|(4) | Filed as an exhibit to Onyxs Annual Report on
    Form 10-K for the
    year ended December 31, 2002.             
|   
|(5) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended March 31, 1999.          
|   
|(6) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    March 1, 2000.                           
|   
|(7) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2000.      
|   
|(8) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2001.      
|   
|(9) | Filed as an exhibit to Onyxs Registration Statement on
    Form S-3 filed on
    June 5, 2002
    (No. 333-89850).



|     |                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------
|(10) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2002.         
|    
|(11) | Filed as an exhibit to Onyxs Registration Statement on
    Form S-3 filed on
    March 25, 2003
    (No. 333-104025).
|    
|(12) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2004.         
|    
|(13) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2005.         
|    
|(14) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    March 14, 2005.                             
|    
|(15) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    June 7, 2005.                               
|    
|(16) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    December 9, 2005.                           

48



---



##### 



SIGNATURES


10-K




| |                           
| | --------------------------
| | Onyx Pharmaceuticals, Inc.



| |     |                           
| | --- | --------------------------
| | By: | /s/ Hollings C.
    Renton

| |                                      
| | -------------------------------------
| | Hollings C. Renton                   
| | Chairman of the Board,               
| | President and Chief Executive Officer

POWER OF ATTORNEY


attorney-in 10-K, attorneys-in




|                                                       |  |                                                                                                                  |  |                |  | 
|------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------- |  | -------------- |  | 
|Signature                                              |  | Title                                                                                                            |  | Date          
|                                                       |  |                                                                                                                  |  |               
|                                                      
|/s/ Hollings C. RentonHollings C. Renton               |  | Chairman of the Board,
    President and Chief Executive Officer (Principal Executive and
    Financial Officer) |  | March 16, 2006
|                                                      
|/s/ Marilyn E. WortzmanMarilyn E. Wortzman             |  | Vice President, Finance and Administration
    (Principal Accounting Officer)                                    |  | March 16, 2006
|                                                      
|/s/ Paul GoddardPaul Goddard, Ph.D.                    |  | Director                                                                                                         |  | March 16, 2006
|                                                      
|/s/ Antonio
    Grillo-LópezAntonio Grillo-López, M.D. |  | Director                                                                                                         |  | March 16, 2006
|                                                      
|/s/ Magnus LundbergMagnus Lundberg                     |  | Director                                                                                                         |  | March 16, 2006

49



---



##### 



|                                            |  |          |  |                |  | 
|------------------------------------------- |  | -------- |  | -------------- |  | 
|Signature                                   |  | Title    |  | Date          
|                                            |  |          |  |               
|                                           
|/s/ Corinne LyleCorinne Lyle                |  | Director |  | March 16, 2006
|                                           
|/s/ Wendell WierengaWendell Wierenga, Ph.D. |  | Director |  | March 16, 2006
|                                           
|/s/ Thomas G. WiggansThomas G. Wiggans      |  | Director |  | March 16, 2006

50



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM












,








51



---



##### 



ONYX PHARMACEUTICALS, INC.


BALANCE SHEETS


|                                     |                                                                                                                                                                              |                             |   |          |      |  |   |          |  
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | - | -------- | ---- |  | - | -------- | -
|                                     |                                                                                                                                                                              | December 31,                |  
|                                     |                                                                                                                                                                              |                             |  
|                                     |                                                                                                                                                                              | 2005                        |   |          | 2004 | 
|                                     |                                                                                                                                                                              |                             |   |          |      | 
|                                     |                                                                                                                                                                              | (In thousands, except share |  
|                                     |                                                                                                                                                                              | and per share amounts)      |  
|ASSETS                               |                                                                                                                                                                              |                             |   |          |      |  |   |         
|                                     | Current Assets:                                                                                                                                                              |                             |   |          |      |  |   |          |  
|                                     | Cash and cash equivalents                                                                                                                                                    |                             | $ | 46,064   |      |  | $ | 74,243   |  
|                                     | Short-term marketable securities                                                                                                                                             |                             |   | 228,754  |      |  |   | 135,381  |  
|                                     | Receivable from collaboration partner                                                                                                                                        |                             |   | 4,350    |      |  |   | 1,029    |  
|                                     | Prepaid expenses and other current assets                                                                                                                                    |                             |   | 3,935    |      |  |   | 2,778    |  
|                                     |                                                                                                                                                                              |                             |   |          |      | 
|                                     | Total current assets                                                                                                                                                         |                             |   | 283,103  |      |  |   | 213,431  |  
|                                     | Long-term marketable securities                                                                                                                                              |                             |   | 9,862    |      |  |   |         |  
|                                     | Property and equipment, net                                                                                                                                                  |                             |   | 1,617    |      |  |   | 1,623    |  
|                                     | Other assets                                                                                                                                                                 |                             |   | 83       |      |  |   | 492      |  
|                                     |                                                                                                                                                                              |                             |   |          |      | 
|                                     | Total assets                                                                                                                                                                 |                             | $ | 294,665  |      |  | $ | 215,546  |  
|                                     |                                                                                                                                                                              |                             |   |          |      | 
|                                    
|LIABILITIES AND STOCKHOLDERS EQUITY |                                                                                                                                                                              |                             |   |          |      |  |   |         
|                                     | Current Liabilities:                                                                                                                                                         |                             |   |          |      |  |   |          |  
|                                     | Accounts payable                                                                                                                                                             |                             | $ | 581      |      |  | $ | 1,038    |  
|                                     | Payable to collaboration partner                                                                                                                                             |                             |   | 30,823   |      |  |   | 11,520   |  
|                                     | Accrued liabilities                                                                                                                                                          |                             |   | 1,343    |      |  |   | 1,895    |  
|                                     | Accrued clinical trials and related expenses                                                                                                                                 |                             |   | 5,567    |      |  |   |         |  
|                                     | Accrued compensation                                                                                                                                                         |                             |   | 3,111    |      |  |   | 910      |  
|                                     | Accrued restructuring                                                                                                                                                        |                             |   |         |      |  |   | 195      |  
|                                     |                                                                                                                                                                              |                             |   |          |      | 
|                                     | Total current liabilities                                                                                                                                                    |                             |   | 41,425   |      |  |   | 15,558   |  
|                                     | Advance from collaboration partner                                                                                                                                           |                             |   | 30,000   |      |  |   | 20,000   |  
|                                    
|                                     | Commitments and contingencies                                                                                                                                                |                             |   |          |      |  |   |          |  
|                                    
|                                     | Stockholders Equity:                                                                                                                                                        |                             |   |          |      |  |   |          |  
|                                     | Preferred stock, $0.001 par value; 5,000,000 shares
    authorized; none issued and outstanding                                                                              |                             |   |         |      |  |   |         |  
|                                     | Common stock, $0.001 par value; 50,000,000 shares
    authorized; 41,210,734 and 35,266,667 shares issued and
    outstanding as of December 31, 2005 and 2004, respectively |                             |   | 41       |      |  |   | 35       |  
|                                     | Additional paid-in capital                                                                                                                                                   |                             |   | 569,800  |      |  |   | 430,966  |  
|                                     | Receivable from stock option exercises                                                                                                                                       |                             |   | (24      | )    |  |   |         |  
|                                     | Accumulated other comprehensive loss                                                                                                                                         |                             |   | (767     | )    |  |   | (377     | )
|                                     | Accumulated deficit                                                                                                                                                          |                             |   | (345,810 | )    |  |   | (250,636 | )
|                                     |                                                                                                                                                                              |                             |   |          |      | 
|                                     | Total stockholders equity                                                                                                                                                   |                             |   | 223,240  |      |  |   | 179,988  |  
|                                     |                                                                                                                                                                              |                             |   |          |      | 
|                                     | Total liabilities and stockholders equity                                                                                                                                   |                             | $ | 294,665  |      |  | $ | 215,546  |  
|                                     |                                                                                                                                                                              |                             |   |          |      | 



52



---



##### 



ONYX PHARMACEUTICALS, INC.


STATEMENTS OF OPERATIONS


|                                                              |  |                                          |          |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------- |  | ---------------------------------------- | -------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                              |  | Year Ended December 31,                  |         
|                                                              |  |                                          |         
|                                                              |  | 2005                                     |          |   | 2004 |   |         | 2003 | 
|                                                              |  |                                          |          |   |      |   |         |      | 
|                                                              |  | (In thousands, except per share amounts) |         
|Revenue:                                                      |  |                                          |          |   |      |   |         |      |  |   |         |  
|Contract revenue                                              |  | $                                        | 1,000    |   |      | $ | 500     |      |  | $ |        |  
|                                                              |  |                                          |          |   |      |   |         |      | 
|Total revenue                                                 |  |                                          | 1,000    |   |      |   | 500     |      |  |   |        |  
|Operating expenses:                                           |  |                                          |          |   |      |   |         |      |  |   |         |  
|Research and development                                      |  |                                          | 63,120   |   |      |   | 35,846  |      |  |   | 32,059  |  
|Selling, general and administrative                           |  |                                          | 39,671   |   |      |   | 14,316  |      |  |   | 7,939   |  
|Restructuring                                                 |  |                                          |         |   |      |   | 258     |      |  |   | 5,530   |  
|                                                              |  |                                          |          |   |      |   |         |      | 
|Total operating expenses                                      |  |                                          | 102,791  |   |      |   | 50,420  |      |  |   | 45,528  |  
|                                                              |  |                                          |          |   |      |   |         |      | 
|Loss from operations                                          |  |                                          | (101,791 | ) |      |   | (49,920 | )    |  |   | (45,528 | )
|Interest income, net                                          |  |                                          | 6,242    |   |      |   | 3,164   |      |  |   | 834     |  
|Other expense  related party                                 |  |                                          |         |   |      |   |        |      |  |   | (275    | )
|Other income                                                  |  |                                          | 375      |   |      |   |        |      |  |   |        |  
|                                                              |  |                                          |          |   |      |   |         |      | 
|Net loss                                                      |  | $                                        | (95,174  | ) |      | $ | (46,756 | )    |  | $ | (44,969 | )
|                                                              |  |                                          |          |   |      |   |         |      | 
|Basic and diluted net loss per share                          |  | $                                        | (2.64    | ) |      | $ | (1.36   | )    |  | $ | (1.73   | )
|                                                              |  |                                          |          |   |      |   |         |      | 
|Shares used in computing basic and diluted net loss per share |  |                                          | 36,039   |   |      |   | 34,342  |      |  |   | 25,953  |  
|                                                              |  |                                          |          |   |      |   |         |      | 



53



---



##### 



ONYX PHARMACEUTICALS, INC.


STATEMENT OF STOCKHOLDERS EQUITY


|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |   |   |          |         |   |   |         |         |  
|----------------------------- | ---------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ---------- | --------- | ---------- | ---- | -- | ---------- | ----- | - | ------------- | ------- |  | ----------- | ---- | ----- | ------------- | - | ---- | ------ | - | - | -------- | ------- | - | - | ------- | ------- | -
|                              |                                                                                                            |                                                    |            |           |            |      |    | Receivable |       |   | Accumulated   |         |  |             |      |      
|                              |                                                                                                            |                                                    |            |           |            | From |    |            | Other |   |               |         |  |            
|                              |                                                                                                            | Common Stock                                       |            |           | Additional |      |    | Stock      |       |   | Comprehensive |         |  |             |      | Total |              
|                              |                                                                                                            |                                                    |            |           | Paid-In    |      |    | Option     |       |   | Income        |         |  | Accumulated |      |       | Stockholders |  
|                              |                                                                                                            | Shares                                             |            |           | Amount     |      |    | Capital    |       |   | Exercises     |         |  | (Loss)      |      |       | Deficit       |   |      | Equity |  
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  
|                              |                                                                                                            | (In thousands, except share and per share amounts) |           
|Balances at December 31, 2002 |                                                                                                            |                                                    | 21,614,624 |           |            | $    | 22 |            |       | $ | 187,633       |         |  | $           |     |       |               | $ | 40   |        |   | $ | (158,911 | )       |   | $ | 28,784  |        
|                              | Exercise of stock options at prices ranging from $1.07 to
    $25.63 per share                             |                                                    |            | 656,308   |            |      |    | 1          |       |   |               | 4,679   |  |             |      | (235  | )             |   |      |       |   |   |          |        |   |   |         | 4,445   |  
|                              | Issuance of common stock in private placement, net of costs of
    $98                                     |                                                    |            | 2,105,263 |            |      |    | 2          |       |   |               | 9,900   |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 9,902   |  
|                              | Issuance of common stock in connection with follow-on public
    offering, net of issuance costs of $5,826 |                                                    |            | 5,179,000 |            |      |    | 5          |       |   |               | 73,719  |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 73,724  |  
|                              | Stock-based compensation, related to non-employee stock option
    grants                                  |                                                    |            |          |            |      |    |           |       |   |               | 1,501   |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 1,501   |  
|                              | Issuance of common stock pursuant to employee stock purchase plan                                          |                                                    |            | 30,827    |            |      |    |           |       |   |               | 145     |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 145     |  
|                              | Comprehensive loss:                                                                                        |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |      |               |   |      |        |   |   |          |         |   |   |         |         |  
|                              | Change in unrealized loss on investments                                                                   |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      | (13    | ) |   |          |        |   |   |         | (13     | )
|                              | Net loss                                                                                                   |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      |       |   |   |          | (44,969 | ) |   |         | (44,969 | )
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  
|                              | Comprehensive loss                                                                                         |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | (44,982 | )
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  
|Balances at December 31, 2003 |                                                                                                            |                                                    | 29,586,022 |           |            |      | 30 |            |       |   | 277,577       |         |  |             | (235 | )     |               |   | 27   |        |   |   | (203,880 | )       |   |   | 73,519  |        
|                              | Exercise of stock options at prices ranging from $1.07 to
    $38.08 per share                             |                                                    |            | 424,265   |            |      |    |           |       |   |               | 3,275   |  |             |      | 235   |               |   |      |       |   |   |          |        |   |   |         | 3,510   |  
|                              | Issuance of common stock in connection with follow-on public
    offering, net of issuance costs of $9,837 |                                                    |            | 4,685,693 |            |      |    | 5          |       |   |               | 148,301 |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 148,306 |  
|                              | Stock-based compensation, related to non-employee stock option
    grants                                  |                                                    |            |          |            |      |    |           |       |   |               | 1,353   |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 1,353   |  
|                              | Issuance of common stock pursuant to employee stock purchase plan                                          |                                                    |            | 16,852    |            |      |    |           |       |   |               | 105     |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 105     |  
|                              | Exercise of warrants                                                                                       |                                                    |            | 553,835   |            |      |    |           |       |   |               | 355     |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 355     |  
|                              | Comprehensive loss:                                                                                        |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |   |   |          |         |   |   |         |         |  
|                              | Change in unrealized loss on investments                                                                   |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      | (404   | ) |   |          |        |   |   |         | (404    | )
|                              | Net loss                                                                                                   |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      |       |   |   |          | (46,756 | ) |   |         | (46,756 | )
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  
|                              | Comprehensive loss                                                                                         |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | (47,160 | )
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  
|Balances at December 31, 2004 |                                                                                                            |                                                    | 35,266,667 |           |            |      | 35 |            |       |   | 430,966       |         |  |             |     |       |               |   | (377 | )      |   |   | (250,636 | )       |   |   | 179,988 |        
|                              | Exercise of stock options at prices ranging from $4.00 to
    $27.34 per share                             |                                                    |            | 152,093   |            |      |    |           |       |   |               | 1,177   |  |             |      | (24   | )             |   |      |       |   |   |          |        |   |   |         | 1,153   |  
|                              | Issuance of common stock in connection with follow-on public
    offering, net of issuance costs of $8,953 |                                                    |            | 5,750,000 |            |      |    | 6          |       |   |               | 136,228 |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 136,234 |  
|                              | Stock-based compensation, related to non-employee stock option
    grants                                  |                                                    |            |          |            |      |    |           |       |   |               | 906     |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 906     |  
|                              | Issuance of common stock pursuant to employee stock purchase plan                                          |                                                    |            | 12,424    |            |      |    |           |       |   |               | 257     |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 257     |  
|                              | Exercise of warrants                                                                                       |                                                    |            | 29,550    |            |      |    |           |       |   |               | 266     |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | 266     |  
|                              | Comprehensive loss:                                                                                        |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |   |   |          |         |   |   |         |         |  
|                              | Change in unrealized loss on investments                                                                   |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      | (390   | ) |   |          |        |   |   |         | (390    | )
|                              | Net loss                                                                                                   |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      |       |   |   |          | (95,174 | ) |   |         | (95,174 | )
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  
|                              | Comprehensive loss                                                                                         |                                                    |            |          |            |      |    |           |       |   |               |        |  |             |      |      |               |   |      |       |   |   |          |        |   |   |         | (95,564 | )
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  
|Balances at December 31, 2005 |                                                                                                            |                                                    | 41,210,734 |           |            | $    | 41 |            |       | $ | 569,800       |         |  | $           | (24  | )     |               | $ | (767 | )      |   | $ | (345,810 | )       |   | $ | 223,240 |        
|                              |                                                                                                            |                                                    |            |           |            |      |    |            |       |   |               |         |  |             |      |       |               |   |      |        |  



54



---



##### 



ONYX PHARMACEUTICALS, INC.


STATEMENTS OF CASH FLOWS


|                                                                                |  |                        |          |   |      |   |          |      |  |   |         |  
|------------------------------------------------------------------------------- |  | ---------------------- | -------- | - | ---- | - | -------- | ---- |  | - | ------- | -
|                                                                                |  | Year Ended December 31 |         
|                                                                                |  |                        |         
|                                                                                |  | 2005                   |          |   | 2004 |   |          | 2003 | 
|                                                                                |  |                        |          |   |      |   |          |      | 
|                                                                                |  | (In thousands)         |         
|Cash flows from operating activities:                                           |  |                        |          |   |      |   |          |      |  |   |         |  
|Net loss                                                                        |  | $                      | (95,174  | ) |      | $ | (46,756  | )    |  | $ | (44,969 | )
|Adjustments to reconcile net loss to net cash used in operating
    activities: |  |                        |          |   |      |   |          |      |  |   |         |  
|Depreciation and amortization                                                   |  |                        | 630      |   |      |   | 194      |      |  |   | 1,124   |  
|(Gain)/ Loss on investment                                                      |  |                        | (375     | ) |      |   |         |      |  |   | 275     |  
|Noncash restructuring charges                                                   |  |                        |         |   |      |   | 280      |      |  |   | 2,341   |  
|Gain on sale of fixed assets                                                    |  |                        | (7       | ) |      |   | (18      | )    |  |   | (9      | )
|Forgiveness of note receivable                                                  |  |                        |         |   |      |   | 11       |      |  |   | 16      |  
|Stock-based compensation to consultants                                         |  |                        | 906      |   |      |   | 1,353    |      |  |   | 1,501   |  
|Changes in assets and liabilities:                                              |  |                        |          |   |      |   |          |      |  |   |         |  
|Receivable from collaboration partner                                           |  |                        | (3,321   | ) |      |   | (445     | )    |  |   | (584    | )
|Prepaid expenses and other current assets                                       |  |                        | (1,157   | ) |      |   | (1,139   | )    |  |   | (345    | )
|Other assets                                                                    |  |                        | 34       |   |      |   | (84      | )    |  |   | 32      |  
|Accounts payable                                                                |  |                        | (457     | ) |      |   | 739      |      |  |   | (437    | )
|Accrued liabilities                                                             |  |                        | (552     | ) |      |   | 1,121    |      |  |   | (599    | )
|Accrued clinical trials and related expenses                                    |  |                        | 5,567    |   |      |   | (147     | )    |  |   | (2,830  | )
|Payable to collaboration partner                                                |  |                        | 19,303   |   |      |   | (2,112   | )    |  |   | 6,847   |  
|Accrued compensation                                                            |  |                        | 2,201    |   |      |   | 188      |      |  |   | (438    | )
|Accrued restructuring                                                           |  |                        | (195     | ) |      |   | (130     | )    |  |   | 294     |  
|                                                                                |  |                        |          |   |      |   |          |      | 
|Net cash used in operating activities                                           |  |                        | (72,597  | ) |      |   | (46,945  | )    |  |   | (37,781 | )
|                                                                                |  |                        |          |   |      |   |          |      | 
|Cash flows from investing activities:                                           |  |                        |          |   |      |   |          |      |  |   |         |  
|Purchases of marketable securities                                              |  |                        | (336,645 | ) |      |   | (201,304 | )    |  |   | (61,568 | )
|Maturities of marketable securities                                             |  |                        | 233,020  |   |      |   | 115,607  |      |  |   | 40,286  |  
|Proceeds from sale of Syrxx Investment                                          |  |                        | 750      |   |      |   |         |      |  |   |        |  
|Capital expenditures                                                            |  |                        | (624     | ) |      |   | (1,573   | )    |  |   | (157    | )
|Proceeds from sale of fixed assets                                              |  |                        | 7        |   |      |   | 595      |      |  |   | 302     |  
|Proceeds from repayment of note receivable                                      |  |                        |         |   |      |   | 275      |      |  |   |        |  
|                                                                                |  |                        |          |   |      |   |          |      | 
|Net cash used in investing activities                                           |  |                        | (103,492 | ) |      |   | (86,400  | )    |  |   | (21,137 | )
|                                                                                |  |                        |          |   |      |   |          |      | 
|Cash flows from financing activities:                                           |  |                        |          |   |      |   |          |      |  |   |         |  
|Advance from collaboration partner                                              |  |                        | 10,000   |   |      |   |         |      |  |   | 15,000  |  
|Net proceeds from issuances of common stock                                     |  |                        | 137,910  |   |      |   | 152,276  |      |  |   | 88,216  |  
|                                                                                |  |                        |          |   |      |   |          |      | 
|Net cash provided by financing activities                                       |  |                        | 147,910  |   |      |   | 152,276  |      |  |   | 103,216 |  
|                                                                                |  |                        |          |   |      |   |          |      | 
|Net increase (decrease) in cash and cash equivalents                            |  |                        | (28,179  | ) |      |   | 18,931   |      |  |   | 44,298  |  
|Cash and cash equivalents at beginning of period                                |  |                        | 74,243   |   |      |   | 55,312   |      |  |   | 11,014  |  
|                                                                                |  |                        |          |   |      |   |          |      | 
|Cash and cash equivalents at end of period                                      |  | $                      | 46,064   |   |      | $ | 74,243   |      |  | $ | 55,312  |  
|                                                                                |  |                        |          |   |      |   |          |      | 



55



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS


December 31, 2005




|        |                                           
|------- | ------------------------------------------
|Note 1. | Summary of Significant Accounting Policies



| |            
| | -----------
| | The Company

tm


®




| |                    
| | -------------------
| | Revenue Recognition



Contract Revenue from Collaborations.






| |                 
| | ----------------
| | Use of Estimates





| |                  
| | -----------------
| | Reclassifications



56



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Research and Development









| |                                           
| | ------------------------------------------
| | Cash Equivalents and Marketable Securities





57



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)






| |                       
| | ----------------------
| | Property and Equipment





| |                                
| | -------------------------------
| | Impairment of Long-Lived Assets





| |                         
| | ------------------------
| | Stock-Based Compensation







58



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                                        |  |                         |           |  |      |  |           |      |  |  |           | 
|------------------------------------------------------- |  | ----------------------- | --------- |  | ---- |  | --------- | ---- |  |  | --------- | 
|                                                        |  | Year Ended December 31, |          
|                                                        |  |                         |          
|                                                        |  | 2005                    |           |  | 2004 |  |           | 2003 | 
|                                                        |  |                         |           |  |      |  |           |      | 
|Risk-free interest rate                                 |  |                         | 3.80%     |  |      |  | 2.92%     |      |  |  | 2.34%     | 
|Expected life                                           |  |                         | 3.8 years |  |      |  | 3.7 years |      |  |  | 3.0 years | 
|Expected volatility                                     |  |                         | 0.74      |  |      |  | 0.85      |      |  |  | 0.89      | 
|Expected dividends                                      |  |                         | None      |  |      |  | None      |      |  |  | None      | 
|Weighted average fair value of options at date of grant |  |                         | $13.55    |  |      |  | $22.93    |      |  |  | $3.48     | 



|                                                                                                                                                |                                                    |                                          |          |       |      |   |         |       |   |   |         |       |  
|----------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------- | ---------------------------------------- | -------- | ----- | ---- | - | ------- | ----- | - | - | ------- | ----- | -
|                                                                                                                                                |                                                    | Year Ended December 31,                  |         
|                                                                                                                                                |                                                    |                                          |         
|                                                                                                                                                |                                                    | 2005                                     |          |       | 2004 |   |         | 2003  |  
|                                                                                                                                                |                                                    |                                          |          |       |      |   |         |       |  
|                                                                                                                                                |                                                    | (In thousands, except per share amounts) |         
|Net loss  as reported                                                                                                                          |                                                    | $                                        | (95,174  | )     |      | $ | (46,756 | )     |   | $ | (44,969 | )    
|Deduct: Total stock-based employee compensation determined under
    the fair value based method for all awards, net of related tax
    effects |                                                    |                                          | (13,333  | )     |      |   | (6,071  | )     |   |   | (1,277  | )    
|                                                                                                                                                |                                                    |                                          |          |       |      |   |         |       |  
|Pro forma net loss                                                                                                                              |                                                    | $                                        | (108,507 | )     |      | $ | (52,827 | )     |   | $ | (46,246 | )    
|                                                                                                                                                |                                                    |                                          |          |       |      |   |         |       |  
|Loss per share:                                                                                                                                 |                                                    |                                          |          |       |      |   |         |       |   |   |         |      
|                                                                                                                                                | Basic and diluted net loss per share  as reported |                                          | $        | (2.64 | )    |   | $       | (1.36 | ) |   | $       | (1.73 | )
|                                                                                                                                                |                                                    |                                          |          |       |      |   |         |       |  
|                                                                                                                                                | Basic and diluted net loss per share  pro forma   |                                          | $        | (3.01 | )    |   | $       | (1.54 | ) |   | $       | (1.78 | )
|                                                                                                                                                |                                                    |                                          |          |       |      |   |         |       |  







| |                   
| | ------------------
| | Net Loss Per Share



|               |  |                |       |  |      |  |       |      |  |  |       | 
|-------------- |  | -------------- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|               |  | December 31,   |      
|               |  |                |      
|               |  | 2005           |       |  | 2004 |  |       | 2003 | 
|               |  |                |       |  |      |  |       |      | 
|               |  | (In thousands) |      
|Stock options  |  |                | 3,806 |  |      |  | 2,296 |      |  |  | 1,984 | 
|Stock warrants |  |                | 9     |  |      |  | 40    |      |  |  | 743   | 
|               |  |                |       |  |      |  |       |      | 
|               |  |                | 3,815 |  |      |  | 2,336 |      |  |  | 2,727 | 
|               |  |                |       |  |      |  |       |      | 

59



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |                   
| | ------------------
| | Comprehensive Loss





| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | Concentration of Credit Risk and Significant Research and
    Development Collaborators







| |             
| | ------------
| | Income Taxes





| |                  
| | -----------------
| | Segment Reporting





| |                                     
| | ------------------------------------
| | Recently Issued Accounting Standards





| |                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. A modified prospective method in which
    compensation cost is recognized beginning with the effective
    date (a) based on the requirements of FAS 123(R) for
    all share-based payments granted after the effective date and
    (b) based on the requirements of FAS 123 for all
    awards granted to employees prior to the effective date of
    FAS 123(R) that remain unvested on the effective date.
|
| | 2. A modified retrospective method which
    includes the requirements of the modified prospective method
    described above, but also permits entities to restate based on
    the amounts previously recognized under FAS 123 for
    purposes of pro forma disclosures either (a) all prior
    periods presented or (b) prior interim periods of the year
    of adoption.                                     



60



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)










Note 2.     Collaboration
Agreements




| |                  
| | -----------------
| | Bayer Corporation





61



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)










| |                       
| | ----------------------
| | Warner-Lambert Company



Note 3.     Marketable
Securities




62



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                               |                                |                |         |         |            |   |     |            |  |   |            |      |   |   |         |         | 
|---------------------------------------------- | ------------------------------ | -------------- | ------- | ------- | ---------- | - | --- | ---------- |  | - | ---------- | ---- | - | - | ------- | ------- | 
|                                               |                                | 2005           |        
|                                               |                                |                |        
|                                               |                                | Adjusted       |         |         | Unrealized |   |     | Unrealized |  |   | Estimated  |     
|                                               |                                | Cost           |         |         | Gains      |   |     | (Losses)   |  |   | Fair Value |     
|                                               |                                |                |         |         |            |   |     |            |  |   |            |     
|                                               |                                | (In thousands) |        
|U.S. government investments:                   |                                |                |         |         |            |   |     |            |  |   |            |      |   |   |         |        
|                                               | Maturing within 1 year         |                | $       | 20,424  |            |   | $   | 1          |  |   | $          | (65  | ) |   | $       | 20,360  | 
|                                               | Maturing between 1 and 2 years |                |         | 15,182  |            |   |     |           |  |   |            | (107 | ) |   |         | 15,075  | 
|                                               |                                |                |         |         |            |   |     |            |  |   |            |     
|Total government investments                   |                                |                | 35,606  |         |            |   | 1   |            |  |   | (172       | )    |   |   | 35,435  |        
|Corporate debt investments:                    |                                |                |         |         |            |   |     |            |  |   |            |      |   |   |         |        
|                                               | Maturing within 1 year         |                |         | 173,460 |            |   |     | 156        |  |   |            | (654 | ) |   |         | 172,962 | 
|                                               | Maturing between 1 and 2 years |                |         | 30,317  |            |   |     |           |  |   |            | (98  | ) |   |         | 30,219  | 
|                                               |                                |                |         |         |            |   |     |            |  |   |            |     
|Total corporate investments                    |                                |                | 203,777 |         |            |   | 156 |            |  |   | (752       | )    |   |   | 203,181 |        
|                                               |                                |                |         |         |            |   |     |            |  |   |            |     
|Total available-for-sale marketable securities |                                | $              | 239,383 |         |            | $ | 157 |            |  | $ | (924       | )    |   | $ | 238,616 |        
|                                               |                                |                |         |         |            |   |     |            |  |   |            |     

|                                               |                                |                |         |        |            |   |    |            |  |   |            |      |   |   |         |        | 
|---------------------------------------------- | ------------------------------ | -------------- | ------- | ------ | ---------- | - | -- | ---------- |  | - | ---------- | ---- | - | - | ------- | ------ | 
|                                               |                                | 2004           |        
|                                               |                                |                |        
|                                               |                                | Adjusted       |         |        | Unrealized |   |    | Unrealized |  |   | Estimated  |     
|                                               |                                | Cost           |         |        | Gains      |   |    | (Losses)   |  |   | Fair Value |     
|                                               |                                |                |         |        |            |   |    |            |  |   |            |     
|                                               |                                | (In thousands) |        
|U.S. government investments:                   |                                |                |         |        |            |   |    |            |  |   |            |      |   |   |         |       
|                                               | Maturing within 1 year         |                | $       | 41,416 |            |   | $  | 2          |  |   | $          | (44  | ) |   | $       | 41,374 | 
|                                               | Maturing between 1 and 2 years |                |         | 10,005 |            |   |    |           |  |   |            | (113 | ) |   |         | 9,892  | 
|                                               |                                |                |         |        |            |   |    |            |  |   |            |     
|Total government investments                   |                                |                | 51,421  |        |            |   | 2  |            |  |   | (157       | )    |   |   | 51,266  |       
|Corporate debt investments:                    |                                |                |         |        |            |   |    |            |  |   |            |      |   |   |         |       
|                                               | Maturing within 1 year         |                |         | 75,594 |            |   |    | 8          |  |   |            | (154 | ) |   |         | 75,448 | 
|                                               | Maturing between 1 and 2 years |                |         | 8,742  |            |   |    |           |  |   |            | (75  | ) |   |         | 8,667  | 
|                                               |                                |                |         |        |            |   |    |            |  |   |            |     
|Total corporate investments                    |                                |                | 84,336  |        |            |   | 8  |            |  |   | (229       | )    |   |   | 84,115  |       
|                                               |                                |                |         |        |            |   |    |            |  |   |            |     
|Total available-for-sale marketable securities |                                | $              | 135,757 |        |            | $ | 10 |            |  | $ | (386       | )    |   | $ | 135,381 |       
|                                               |                                |                |         |        |            |   |    |            |  |   |            |     



63



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




|        |                       
|------- | ----------------------
|Note 4. | Property and Equipment



|                                               |  |                |        |   |      |   |       |  
|---------------------------------------------- |  | -------------- | ------ | - | ---- | - | ----- | -
|                                               |  | December 31,   |       
|                                               |  |                |       
|                                               |  | 2005           |        |   | 2004 |  
|                                               |  |                |        |   |      |  
|                                               |  | (In thousands) |       
|Computers, machinery and equipment             |  | $              | 1,708  |   |      | $ | 1,174 |  
|Furniture and fixtures                         |  |                | 413    |   |      |   | 410   |  
|Leasehold improvements                         |  |                | 734    |   |      |   | 647   |  
|                                               |  |                |        |   |      |  
|                                               |  |                | 2,855  |   |      |   | 2,231 |  
|Less accumulated depreciation and amortization |  |                | (1,238 | ) |      |   | (608  | )
|                                               |  |                |        |   |      |  
|                                               |  | $              | 1,617  |   |      | $ | 1,623 |  
|                                               |  |                |        |   |      |  









|        |                      
|------- | ---------------------
|Note 5. | Long-Term Obligations





|        |                
|------- | ---------------
|Note 6. | Facility Leases



64



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)








|                         |            |   |       |     | 
|------------------------ | ---------- | - | ----- | --- | 
|Year ending December 31: |            |   |       |    
|                         | 2006       |   | $     | 547 | 
|                         | 2007       |   |       | 561 | 
|                         | 2008       |   |       | 575 | 
|                         | 2009       |   |       | 589 | 
|                         | 2010       |   |       | 106 | 
|                         | Thereafter |   |       |    | 
|                         |            |   |      
|                         |            | $ | 2,378 |    
|                         |            |   |      





|        |                           
|------- | --------------------------
|Note 7. | Related Party Transactions





|        |            
|------- | -----------
|Note 8. | 401(k) Plan





|        |                     
|------- | --------------------
|Note 9. | Stockholders Equity



| |                                               
| | ----------------------------------------------
| | Stock Options and Employee Stock Purchase Plan



65



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)












|                              |                            |                  |           |                           |                  |          |           |                |   |   |       |       | 
|----------------------------- | -------------------------- | ---------------- | --------- | ------------------------- | ---------------- | -------- | --------- | -------------- | - | - | ----- | ----- | 
|                              |                            |                  |           | Outstanding Stock Options |                 
|                              |                            |                  |           |                           |                 
|                              |                            |                  |           |                           |                  | Weighted |          
|                              |                            | Shares Available |           |                           |                  |          | Average   |               
|                              |                            | for Grant        |           |                           | Number of Shares |          |           | Exercise Price |  
|                              |                            |                  |           |                           |                  |          |           |                |  
|Balances at December 31, 2002 |                            |                  | 609,257   |                           |                  |          | 2,749,951 |                |   | $ | 7.57  |      
|                              | Shares authorized          |                  |           | 700,000                   |                  |          |           |               |   |   | $     |      | 
|                              | Options granted            |                  |           | (446,973                  | )                |          |           | 446,973        |   |   | $     | 6.34  | 
|                              | Options exercised          |                  |           |                          |                  |          |           | (656,308       | ) |   | $     | 7.13  | 
|                              | Options forfeited          |                  |           | 556,932                   |                  |          |           | (556,932       | ) |   | $     | 6.83  | 
|                              |                            |                  |           |                           |                  |          |           |                |  
|Balances at December 31, 2003 |                            |                  | 1,419,216 |                           |                  |          | 1,983,684 |                |   | $ | 7.65  |      
|                              | Shares authorized          |                  |           | 600,000                   |                  |          |           |               |   |   | $     |      | 
|                              | Options granted            |                  |           | (802,925                  | )                |          |           | 802,925        |   |   | $     | 38.27 | 
|                              | Options exercised          |                  |           |                          |                  |          |           | (424,265       | ) |   | $     | 7.72  | 
|                              | Options forfeited          |                  |           | 65,902                    |                  |          |           | (65,902        | ) |   | $     | 19.85 | 
|                              |                            |                  |           |                           |                  |          |           |                |  
|Balances at December 31, 2004 |                            |                  | 1,282,193 |                           |                  |          | 2,296,442 |                |   | $ | 17.99 |      
|                              | Shares authorized          |                  |           | 3,990,000                 |                  |          |           |               |   |   | $     |      | 
|                              | Options granted            |                  |           | (1,718,000                | )                |          |           | 1,718,000      |   |   | $     | 24.52 | 
|                              | Options exercised          |                  |           |                          |                  |          |           | (152,093       | ) |   | $     | 7.73  | 
|                              | Options forfeited/ expired |                  |           | 56,268                    |                  |          |           | (56,268        | ) |   | $     | 29.85 | 
|                              |                            |                  |           |                           |                  |          |           |                |  
|Balances at December 31, 2005 |                            |                  | 3,610,461 |                           |                  |          | 3,806,081 |                |   | $ | 21.17 |      
|                              |                            |                  |           |                           |                  |          |           |                |  

66



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                         |       |                  |                     |           |            |  |     |          |  |          |             |       |  |                |         |           |  |   |       |       | 
|------------------------ | ----- | ---------------- | ------------------- | --------- | ---------- |  | --- | -------- |  | -------- | ----------- | ----- |  | -------------- | ------- | --------- |  | - | ----- | ----- | 
|Options Outstanding      |       |                  | Options Exercisable |          
|                         |       |                  |                     |          
|                         |       | Weighted Average |                     |           | Weighted   |  |     |         
|                         |       | Contractual Life |                     |           | Average    |  |     |          |  | Weighted |            
|                         |       | Number           |                     |           | Remaining  |  |     | Exercise |  |          | Number      |       |  | Average        |        
|Range of Exercise Prices |       | Outstanding      |                     |           | (In years) |  |     | Price    |  |          | Exercisable |       |  | Exercise Price |        
|                         |       |                  |                     |           |            |  |     |          |  |          |             |       |  |                |        
|$ 3.82 - $ 5.00          |       |                  | 469,406             |           |            |  | 6.7 |          |  | $        | 4.56        |       |  |                | 369,279 |           |  | $ | 4.54  |      
|$ 5.02 - $ 7.88          |       |                  | 382,503             |           |            |  | 4.7 |          |  | $        | 6.58        |       |  |                | 344,586 |           |  | $ | 6.65  |      
|$ 8.15 - $12.00          |       |                  | 426,989             |           |            |  | 4.4 |          |  | $        | 10.38       |       |  |                | 400,427 |           |  | $ | 10.47 |      
|$12.11 - $21.01          |       |                  | 637,697             |           |            |  | 9.0 |          |  | $        | 20.04       |       |  |                | 83,010  |           |  | $ | 16.16 |      
|$21.56 - $25.23          |       |                  | 233,542             |           |            |  | 9.5 |          |  | $        | 23.43       |       |  |                | 2,042   |           |  | $ | 21.60 |      
|$25.30                   |       |                  | 542,073             |           |            |  | 9.2 |          |  | $        | 25.30       |       |  |                | 88,389  |           |  | $ | 25.30 |      
|$25.44 - $31.85          |       |                  | 383,271             |           |            |  | 9.3 |          |  | $        | 29.54       |       |  |                | 9,708   |           |  | $ | 27.51 |      
|$32.00 - $38.08          |       |                  | 380,650             |           |            |  | 8.3 |          |  | $        | 36.98       |       |  |                | 171,543 |           |  | $ | 36.89 |      
|$38.33 - $48.19          |       |                  | 333,950             |           |            |  | 8.5 |          |  | $        | 39.75       |       |  |                | 121,737 |           |  | $ | 39.63 |      
|$53.37                   |       |                  | 16,000              |           |            |  | 8.3 |          |  | $        | 53.37       |       |  |                | 6,333   |           |  | $ | 53.37 |      
|                         |       |                  |                     |           |            |  |     |          |  |          |             |       |  |                |        
|                         | Total |                  |                     | 3,806,081 |            |  |     | 7.7      |  |          | $           | 21.17 |  |                |         | 1,597,054 |  |   | $     | 14.74 | 
|                         |       |                  |                     |           |            |  |     |          |  |          |             |       |  |                |        



|                                     |  |              |           | 
|------------------------------------ |  | ------------ | --------- | 
|                                     |  | December 31, |          
|                                     |  | 2005         |          
|                                     |  |              |          
|Stock options available for issuance |  |              | 3,610,461 | 
|Stock options outstanding            |  |              | 3,806,081 | 
|Employee stock purchase plan         |  |              | 38,588    | 
|                                     |  |              |          
|Total                                |  |              | 7,455,130 | 
|                                     |  |              |          





| |                
| | ---------------
| | Preferred Stock



67



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |         
| | --------
| | Warrants







|         |              
|-------- | -------------
|Note 10. | Restructuring









|         |             
|-------- | ------------
|Note 11. | Income Taxes



68



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




|                                     |  |                |          |   |      |   |          |  
|------------------------------------ |  | -------------- | -------- | - | ---- | - | -------- | -
|                                     |  | December 31,   |         
|                                     |  |                |         
|                                     |  | 2005           |          |   | 2004 |  
|                                     |  |                |          |   |      |  
|                                     |  | (In thousands) |         
|Net operating loss carryforwards     |  | $              | 122,900  |   |      | $ | 86,400   |  
|Tax credit carryforwards             |  |                | 12,300   |   |      |   | 8,200    |  
|Capitalized research and development |  |                | 4,000    |   |      |   | 6,900    |  
|Deferred revenue                     |  |                | 12,000   |   |      |   | 8,000    |  
|Other                                |  |                | 400      |   |      |   | 400      |  
|                                     |  |                |          |   |      |  
|Total deferred tax assets            |  |                | 151,600  |   |      |   | 109,900  |  
|Valuation allowance                  |  |                | (151,600 | ) |      |   | (109,900 | )
|                                     |  |                |          |   |      |  
|Net deferred tax assets              |  | $              |         |   |      | $ |         |  
|                                     |  |                |          |   |      |  









|         |                                               
|-------- | ----------------------------------------------
|Note 12. | Guarantees, Indemnifications and Contingencies



| |                                
| | -------------------------------
| | Guarantees and Indemnifications



69



---



##### 



ONYX PHARMACEUTICALS, INC.


NOTES TO FINANCIAL STATEMENTS  (Continued)




| |              
| | -------------
| | Contingencies





|         |                 
|-------- | ----------------
|Note 13. | Subsequent Event

Co-Promotion co-promote co-promotion


Co-Promotion




out-of




|         |                                     
|-------- | ------------------------------------
|Note 14. | Quarterly Financial Data (Unaudited)



|                                     |  |                                       |         |   |              |   |         |         |  |   |          |   |  |   |         |  
|------------------------------------ |  | ------------------------------------- | ------- | - | ------------ | - | ------- | ------- |  | - | -------- | - |  | - | ------- | -
|                                     |  | 2005 Quarter Ended                    |        
|                                     |  |                                       |        
|                                     |  | December 31                           |         |   | September 30 |   |         | June 30 |  |   | March 31 |  
|                                     |  |                                       |         |   |              |   |         |         |  |   |          |  
|                                     |  | (In thousands, except per share data) |        
|Total revenues                       |  | $                                     |        |   |              | $ |        |         |  | $ |         |   |  | $ | 1,000   |  
|Net loss                             |  |                                       | (38,352 | ) |              |   | (22,581 | )       |  |   | (18,141  | ) |  |   | (16,100 | )
|Basic and diluted net loss per share |  |                                       | (1.00   | ) |              |   | (0.64   | )       |  |   | (0.51    | ) |  |   | (0.46   | )

|                                     |  |                                       |         |   |              |   |         |         |  |   |          |   |  |   |        |  
|------------------------------------ |  | ------------------------------------- | ------- | - | ------------ | - | ------- | ------- |  | - | -------- | - |  | - | ------ | -
|                                     |  | 2004 Quarter Ended                    |        
|                                     |  |                                       |        
|                                     |  | December 31                           |         |   | September 30 |   |         | June 30 |  |   | March 31 |  
|                                     |  |                                       |         |   |              |   |         |         |  |   |          |  
|                                     |  | (In thousands, except per share data) |        
|Total revenues                       |  | $                                     | 500     |   |              | $ |        |         |  | $ |         |   |  | $ |       |  
|Net loss                             |  |                                       | (14,205 | ) |              |   | (11,264 | )       |  |   | (13,106  | ) |  |   | (8,181 | )
|Basic and diluted net loss per share |  |                                       | (0.40   | ) |              |   | (0.32   | )       |  |   | (0.38    | ) |  |   | (0.25  | )

70



---



##### 



EXHIBIT INDEX


|        |             |                         |  |                                                                                                                                                                                                                                                                                                                            
|------- | ----------- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |             |                        
|Number  |             | Description of Document
|        |             |                        
|        | 3.1(1)      |                         |  | Restated Certificate of Incorporation of the Company.                                                                                                                                                                                                                                                                      
|        | 3.2(1)      |                         |  | Bylaws of the Company.                                                                                                                                                                                                                                                                                                     
|        | 3.3(2)      |                         |  | Certificate of Amendment to Amended and Restated Certificate of
    Incorporation.                                                                                                                                                                                                                                         
|        | 4.1(1)      |                         |  | Reference is made to Exhibits 3.1, 3.2 and 3.3.                                                                                                                                                                                                                                                                            
|        | 4.2(1)      |                         |  | Specimen Stock Certificate.                                                                                                                                                                                                                                                                                                
|        | 4.4(1)      |                         |  | Amended and Restated Information and Registration Rights
    Agreement dated May 30, 1994 and as amended through
    May 16, 1995.                                                                                                                                                                                         
|        | 10.1(1)*    |                         |  | Collaboration Agreement between Bayer Corporation (formerly
    Miles, Inc.) and the Company dated April 22, 1994.                                                                                                                                                                                                         
|        | 10.1(i)(1)* |                         |  | Amendment to Collaboration Agreement between Bayer Corporation
    and the Company dated April 4, 1996.                                                                                                                                                                                                                    
|        | 10.2(1)*    |                         |  | Research, Development and Marketing Collaboration Agreement
    between Warner-Lambert Company and the Company, dated May 2,1995.                                                                                                                                                                                          
|        | 10.2(i)(1)  |                         |  | Waiver of Certain Rights under the Research, Development and
    Marketing Agreement by Warner-Lambert Company dated as of
    March 28, 1996.                                                                                                                                                                             
|        | 10.3(3)*    |                         |  | Technology Transfer Agreement dated April 24, 1992 between
    Chiron Corporation and the Company, as amended in the Chiron
    Onyx HPV Addendum dated December 2, 1992, in the Amendment
    dated February 1, 1994, in the Letter Agreement dated
    May 20, 1994 and in the Letter Agreement dated
    March 29, 1996.
|        | 10.4(1)     | +                       |  | Letter Agreement between Dr. Gregory Giotta and the Company
    dated May 26, 1995.                                                                                                                                                                                                                                        
|        | 10.5(1)     | +                       |  | 1996 Equity Incentive Plan.                                                                                                                                                                                                                                                                                                
|        | 10.6(1)     | +                       |  | 1996 Non-Employee Directors Stock Option Plan.                                                                                                                                                                                                                                                                            
|        | 10.7(1)     | +                       |  | 1996 Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                         
|        | 10.8(1)     | +                       |  | Form of Indemnity Agreement to be signed by executive officers
    and directors of the Company.                                                                                                                                                                                                                           
|        | 10.9(4)*    |                         |  | Amended and restated Research, Development and Marketing
    Collaboration Agreement dated May 2, 1995 between the
    Company and Warner-Lambert Company.                                                                                                                                                                 
|        | 10.10(4)*   |                         |  | Research, Development and Marketing Collaboration Agreement
    dated July 31, 1997 between the Company and Warner-Lambert
    Company.                                                                                                                                                                                    
|        | 10.11(4)*   |                         |  | Amendment to the Amended and Restated Research, Development and
    Marketing Collaboration Agreement, dated December 15, 1997,
    between the Company and Warner-Lambert Company.                                                                                                                                        
|        | 10.12(5)*   |                         |  | Amendment to Collaboration Agreement between Bayer Corporation
    and the Company dated February 1, 1999.                                                                                                                                                                                                                 
|        | 10.13(6)*   |                         |  | Collaboration Agreement between the Company and Warner-Lambert
    Company dated October 13, 1999 and effective
    September 1, 1999.                                                                                                                                                                                     
|        | 10.14(6)    |                         |  | Stock Put and Purchase Agreement between the Company and
    Warner-Lambert Company dated October 13, 1999 and effective
    September 1, 1999.                                                                                                                                                                            
|        | 10.15(6)    |                         |  | Stock Purchase Agreement between the Company and the investors
    dated January 18, 2000.                                                                                                                                                                                                                                 
|        | 10.16(4)*   |                         |  | Second Amendment to the Amended and Restated Research,
    Development and Marketing Agreement between Warner-Lambert and
    the Company dated May 2, 1995.                                                                                                                                                               
|        | 10.17(4)*   |                         |  | Second Amendment to Research, Development and Marketing
    Collaboration Agreement between Warner-Lambert and the Company
    dated July 31, 1997.                                                                                                                                                                        
|        | 10.18(7)    | +                       |  | Employment Offer Letter between Leonard E. Post, Ph.D. and
    the Company dated July 28, 2000.                                                                                                                                                                                                                            
|        | 10.19(13)   | +                       |  | Form of Executive Change in Control Severance Benefits Agreement.                                                                                                                                                                                                                                                          
|        | 10.20(8)*   |                         |  | Amendment #1 to the Collaboration Agreement between the
    Company and Warner-Lambert dated August 6, 2001.                                                                                                                                                                                                               



---



##### 



|        |            |                         |  |                                                                                                                                                                          
|------- | ---------- | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |            |                        
|Number  |            | Description of Document
|        |            |                        
|        | 10.21(8)*  |                         |  | Amendment #3 to the Research, Development and Marketing
    Collaboration Agreement between the Company and Warner-Lambert
    dated August 6, 2001.                     
|        | 10.22(8)*  |                         |  | Amendment #3 to the Amended and Restated Research,
    Development and Marketing Collaboration Agreement between the
    Company and Warner-Lambert dated August 6, 2001.
|        | 10.23(9)   |                         |  | Stock and Warrant Purchase Agreement between the Company and the
    investors dated May 6, 2002.                                                                        
|        | 10.24(10)* |                         |  | Amendment to the Collaboration Agreement between the Company and
    Warner-Lambert Company dated September 16, 2002.                                                    
|        | 10.25(11)  |                         |  | Stock Purchase Agreement between the Company and the investors
    dated February 13, 2003.                                                                              
|        | 10.26(12)  |                         |  | Sublease between the Company and Siebel Systems dated
    August 5, 2004.                                                                                                
|        | 10.27(14)  |                         |  | 2005 Base Salaries for Named Executive Officers                                                                                                                          
|        | 10.28(15)  |                         |  | Onyx Pharmaceuticals, Inc. 2005 Equity Incentive Plan                                                                                                                    
|        | 10.29(16)  |                         |  | Separation Agreement between Onyx Pharmaceuticals, Inc. and
    Leonard E. Post, Ph.D., dated December 5, 2005.                                                          
|        | 23.1       |                         |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                
|        | 24.1       |                         |  | Power of Attorney. Reference is made to the signature page.                                                                                                              
|        | 31.1       |                         |  | Certification required by Rule 13a-14(a) or
    Rule 15d-14(a).                                                                                                          
|        | 32.1       |                         |  | Certifications required by Rule 13a-14(b) or
    Rule 15d-14(b)and Section 1350 of Chapter 63 of
    Title 18 of the United States Code
    (18 U.S.C. 1350).            






|    |                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------
|*   | Confidential treatment has been received for portions of this
    document.                                        
|   
|+   | Indicates management contract or compensatory plan or
    arrangement.                                             
|   
|(1) | Filed as an exhibit to Onyxs Registration Statement on
    Form SB-2
    (No. 333-3176-LA).                       
|   
|(2) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended June 30, 2000.           
|   
|(3) | Filed as an exhibit to Onyxs Annual Report on
    Form 10-K for the
    year ended December 31, 2001.             
|   
|(4) | Filed as an exhibit to Onyxs Annual Report on
    Form 10-K for the
    year ended December 31, 2002.             
|   
|(5) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended March 31, 1999.          
|   
|(6) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    March 1, 2000.                           
|   
|(7) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2000.      
|   
|(8) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2001.      
|   
|(9) | Filed as an exhibit to Onyxs Registration Statement on
    Form S-3 filed on
    June 5, 2002
    (No. 333-89850).



|     |                                                                                                                       
|---- | ----------------------------------------------------------------------------------------------------------------------
|(10) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2002.         
|    
|(11) | Filed as an exhibit to Onyxs Registration Statement on
    Form S-3 filed on
    March 25, 2003
    (No. 333-104025).
|    
|(12) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2004.         
|    
|(13) | Filed as an exhibit to Onyxs Quarterly Report on
    Form 10-Q for the
    quarter ended September 30, 2005.         
|    
|(14) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    March 14, 2005.                             
|    
|(15) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    June 7, 2005.                               
|    
|(16) | Filed as an exhibit to Onyxs Current Report on
    Form 8-K filed on
    December 9, 2005.