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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
  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 Number: 0-28298
 ONYX PHARMACEUTICALS, INC.
  Delaware
    
    94-3154463(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer ID Number)
 
 
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




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##### 



INDEX
 PagePART I: FINANCIAL INFORMATIONItem 1.Financial Statements (Unaudited)Condensed Balance Sheets  March 31, 2009 and December 31, 2008
    
    
    3Condensed Statements of Operations  Three months ended March 31, 2009 and 2008
    
    
    4Condensed Statements of Cash Flows  Three months ended March 31, 2009 and 2008
    
    
    5Notes to Condensed Financial Statements
    
    
    6Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    12Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    18Item 4.Controls and Procedures
    
    
    19PART II: OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    20Item 1A.Risk Factors
    
    
    20Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 3.Defaults Upon Senior Securities
    
    
    36Item 4.Submission of Matters to a Vote of Security Holders
    
    
    36Item 5.Other Information
    
    
    36Item 6.Exhibits
    
    
    36SIGNATURES
    
    
    37EX-10.19EX-10.20(II)EX-10.28(I)EX-10.28(II)EX-31.1EX-31.2EX-32.1
  
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PART I: FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 
 CONDENSED BALANCE SHEETS
 March 31,
    
    
    December 31,2009
    
    
    2008(Unaudited)
    
    
    (Note 1)(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    152,472
    
    
    $
    235,152Marketable securities, current
    
    
    278,181
    
    
    
    183,272Receivable from collaboration partner
    
    
    37,584
    
    
    
    35,836Prepaid expenses and other current assets
    
    
    7,145
    
    
    
    7,799Total current assets
    
    
    475,382
    
    
    
    462,059Marketable securities, non-current
    
    
    36,456
    
    
    
    39,622Property and equipment, net
    
    
    2,941
    
    
    
    3,363Other assets
    
    
    4,717
    
    
    
    4,723Total assets
    
    $
    519,496
    
    
    $
    509,767LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,193
    
    
    $
    93Advance from collaboration partner
    
    
    10,503
    
    
    
    16,633Accrued liabilities
    
    
    5,427
    
    
    
    4,523Accrued clinical trials and related expenses
    
    
    7,395
    
    
    
    6,041Accrued compensation
    
    
    3,439
    
    
    
    6,014Total current liabilities
    
    
    27,957
    
    
    
    33,304Deferred rent and lease incentives
    
    
    1,190
    
    
    
    1,263Commitments and contingenciesStockholders equity:Common stock
    
    
    57
    
    
    
    57Additional paid-in capital
    
    
    959,872
    
    
    
    950,628Receivable from stock option exercises
    
    
    (88
    )
    
    
    (455
    )Accumulated other comprehensive loss
    
    
    (2,847
    )
    
    
    (4,320
    )Accumulated deficit
    
    
    (466,645
    )
    
    
    (470,710
    )Total stockholders equity
    
    
    490,349
    
    
    
    475,200Total liabilities and stockholders equity
    
    $
    519,496
    
    
    $
    509,767
  3




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CONDENSED STATEMENTS OF OPERATIONS
 Three Months EndedMarch 31,2009
    
    
    2008(In thousands, except pershare amounts)Revenue:Revenue from collaboration agreement
    
    $
    53,717
    
    
    $
    48,855Total operating revenue
    
    
    53,717
    
    
    
    48,855Operating Expenses:Research and development
    
    
    28,820
    
    
    
    18,555Selling, general and administrative
    
    
    21,953
    
    
    
    19,844Total operating expenses
    
    
    50,773
    
    
    
    38,399Income from operations
    
    
    2,944
    
    
    
    10,456Investment income, net
    
    
    1,121
    
    
    
    5,271Provision for income taxes
    
    
    
    
    
    
    309Net income
    
    $
    4,065
    
    
    $
    15,418Net income per share:Basic
    
    $
    0.07
    
    
    $
    0.28Diluted
    
    $
    0.07
    
    
    $
    0.27Shares used in computing net income per share:Basic
    
    
    56,715
    
    
    
    55,388Diluted
    
    
    57,197
    
    
    
    56,566
  4




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CONDENSED STATEMENTS OF CASH FLOWS
 Three Months Ended March 31,2009
    
    
    2008( In thousands)Cash flows from operating activities:Net income
    
    $
    4,065
    
    
    $
    15,418Adjustments to reconcile net income to net cash
provided by (used in) operating activities:Realized gains on sales of short-term marketable securities
    
    
    
    
    
    
    (483
    )Depreciation and amortization
    
    
    385
    
    
    
    346Stock-based compensation
    
    
    4,456
    
    
    
    4,838Changes in operating assets and liabilities:Receivable from collaboration partner
    
    
    (1,748
    )
    
    
    (33,059
    )Prepaid expenses and other current assets
    
    
    654
    
    
    
    (1,332
    )Other assets
    
    
    6
    
    
    
    (5
    )Accounts payable
    
    
    1,100
    
    
    
    (80
    )Advance payable to collaboration partner
    
    
    (6,130
    )
    
    
    Accrued liabilities
    
    
    980
    
    
    
    2,451Accrued clinical trials and related expenses
    
    
    1,354
    
    
    
    1,390Accrued compensation
    
    
    (2,575
    )
    
    
    (2,176
    )Deferred rent and lease incentives
    
    
    (73
    )
    
    
    89Net cash provided by (used in) operating activities
    
    
    2,474
    
    
    
    (12,603
    )Cash flows from investing activities:Purchases of marketable securities
    
    
    (165,338
    )
    
    
    (69,558
    )Sales of marketable securities
    
    
    20,068
    
    
    
    82,916Maturities of marketable securities
    
    
    55,000
    
    
    
    113,004Capital expenditures
    
    
    (40
    )
    
    
    (40
    )Net cash provided by (used in) investing activities
    
    
    (90,310
    )
    
    
    126,322Cash flows from financing activities:Purchases of treasury stock
    
    
    (18
    )
    
    
    (528
    )Net proceeds from issuances of common stock
    
    
    5,174
    
    
    
    1,497Net cash provided by financing activities
    
    
    5,156
    
    
    
    969Net increase (decrease) in cash and cash equivalents
    
    
    (82,680
    )
    
    
    114,688Cash and cash equivalents at beginning of period
    
    
    235,152
    
    
    
    161,653Cash and cash equivalents at end of period
    
    $
    152,472
    
    
    $
    276,341
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NOTES TO CONDENSED FINANCIAL STATEMENTS
 March 31, 2009
 (Unaudited)
 Note 1. Basis of Presentation
   Note 2. Revenue from Collaboration Agreement
      6




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Three Months Ended March 31,2009
    
    
    2008(In thousands)Onyxs share of collabration commercial profit
    
    $
    47,547
    
    
    $
    44,597Reimbursement of Onyxs shared marketing expenses
    
    
    5,393
    
    
    
    4,258Royalty income
    
    
    777
    
    
    
    Revenue from collaboration agreement
    
    $
    53,717
    
    
    $
    48,855
 Note 3. Fair Value Measurements
   
    
    Level 1, defined as observable inputs such as quoted prices for identical assets in active markets;
    
    Level 2, defined as inputs other than quoted prices in active markets that are either directly or
indirectly observable; and
    
    Level 3, defined as unobservable inputs in which little or no market data exists, therefore
requiring management to develop its own assumptions based on best estimates of what market
participants would use in pricing an asset or liability at the reporting date.
  7




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Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(In thousands)Money market funds
    
    $
    128,888
    
    
    $
    
    
    
    $
    
    
    
    $
    128,888Commercial paper
    
    
    
    
    
    
    52,964
    
    
    
    
    
    
    
    52,964Auction rate securities
    
    
    
    
    
    
    5,000
    
    
    
    36,456
    
    
    
    41,456U.S. government agencies
    
    
    
    
    
    
    135,190
    
    
    
    
    
    
    
    135,190U.S. treasury bills
    
    
    105,026
    
    
    
    
    
    
    
    
    
    
    
    105,026Total
    
    $
    233,914
    
    
    $
    193,154
    
    
    $
    36,456
    
    
    $
    463,524
  Auction Rate Securities(In thousands)Fair value at December 31, 2008
    
    $
    39,622Transfer to level 2
    
    
    (5,000
    )Change in valuation
    
    
    1,834Fair value at March 31, 2009
    
    $
    36,456
  Note 4. Marketable Securities
   March 31, 2009Adjusted
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)Agency bond investments:Current
    
    $
    229,520
    
    
    $
    703
    
    
    $
    (6
    )
    
    $
    230,217Total agency bond investments
    
    
    229,520
    
    
    
    703
    
    
    
    (6
    )
    
    
    230,217Corporate debt investments:Current
    
    
    47,964
    
    
    
    
    
    
    
    
    
    
    
    47,964Non-current
    
    
    40,000
    
    
    
    
    
    
    
    (3,544
    )
    
    
    36,456Total corporate investments
    
    
    87,964
    
    
    
    
    
    
    
    (3,544
    )
    
    
    84,420Total available-for-sale
marketable securities
    
    $
    317,484
    
    
    $
    703
    
    
    $
    (3,550
    )
    
    $
    314,637
 December 31, 2008Adjusted
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)Agency bond investments:Current
    
    $
    132,319
    
    
    $
    1,054
    
    
    $
    (4
    )
    
    $
    133,369Total agency bond investments
    
    
    132,319
    
    
    
    1,054
    
    
    
    (4
    )
    
    
    133,369Corporate debt investments:Current
    
    
    49,903
    
    
    
    
    
    
    
    
    
    
    
    49,903Non-current
    
    
    45,000
    
    
    
    
    
    
    
    (5,378
    )
    
    
    39,622Total corporate investments
    
    
    94,903
    
    
    
    
    
    
    
    (5,378
    )
    
    
    89,525Total available-for-sale
marketable securities
    
    $
    227,222
    
    
    $
    1,054
    
    
    $
    (5,382
    )
    
    $
    222,894
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Note 5. Other Long-Term Assets
  Note 6. Advance from Collaboration Partner
  Note 7. Stock-Based Compensation
  Employee Stock Plans
  Valuation Assumptions
  9




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Three Months EndedMarch 31,2009
    
    2008Stock Option Plans:Risk-free interest rate
    
    1.78%
    
    2.85%Expected life
    
    4.3 years
    
    4.4 yearsExpected volatility
    
    66%
    
    64%Expected dividends
    
    None
    
    NoneWeighted average option fair value
    
    $15.73
    
    $16.87Stock Bonus Awards:Expected life
    
    3 years
    
    3 yearsExpected dividends
    
    None
    
    NoneWeighted average fair value per share
    
    $29.00
    
    $30.44ESPP:Risk-free interest rate
    
    0.26%
    
    3.34%Expected life
    
    6 months
    
    6 monthsExpected volatility
    
    66%
    
    64%Expected dividends
    
    None
    
    NoneWeighted average shares fair value
    
    $10.42
    
    $17.18
 Note 8. Income Taxes
   Note 9. Net Income per Share
  10




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Note 10. Comprehensive Income
  Three Months EndedMarch 31,2009
    
    
    2008(In thousands)Net
income  as reported
    
    $
    4,065
    
    
    $
    15,418Other comprehensive income (loss):Change in unrealized gain (loss) on available-for-sale securities
    
    
    1,473
    
    
    
    (1,844
    )Comprehensive income
    
    $
    5,538
    
    
    $
    13,574
  Three Months EndedMarch 31,2009
    
    
    2008(In thousands)Increase (decrease) in unrealized gain (loss) on available-for-sale securities
    
    $
    1,473
    
    
    $
    (2,327
    )Reclassification adjustment for net gains on available-for-sale securities
including in net income
    
    
    
    
    
    
    483Change in unrealized gain (loss) on available-for-sale securities
    
    $
    1,473
    
    
    $
    (1,844
    )
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Item 2. 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 Form 10-Q 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 Form 10-Q . Our actual
results could differ materially from those anticipated in these forward-looking statements for many
reasons, including those set forth under Item 1A Risk Factors in this Quarterly Report on Form
10-Q.
 Overview   Changing the way cancer is treated ®
  ®
    12




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Form 10-Q.
 Critical Accounting Policies and the Use of Estimates
  Results of Operations
 Three months ended March 31, 2008 and 2007
 Revenue
  13




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Revenue from Collaboration Agreement
  
 Three Months Ended March 31,2009
    
    
    2008(In thousands)Nexavar product revenue, net (as recorded by Bayer)
    
    $
    178,069
    
    
    $
    151,896Revenue subject to profit sharing (as recorded by Bayer)
    
    $
    166,974
    
    
    $
    151,896Combined cost of goods sold, distribution, selling, general
and administrative expenses
    
    
    71,879
    
    
    
    62,703Combined collaboration commercial profit
    
    
    95,095
    
    
    
    89,193Onyxs share of collaboration commercial profit
    
    
    47,547
    
    
    
    44,597Reimbursement of Onyxs shared marketing expenses
    
    
    5,393
    
    
    
    4,258Royalty income
    
    
    777
    
    
    
    Revenue from collaboration agreement
    
    $
    53,717
    
    
    $
    48,855
   14




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Research and Development Expenses
     Selling, General and Administrative Expenses
  15




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Investment Income
  Liquidity and Capital Resources
       16




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
   March 31, 2009
    
    December 31, 2008Average
    
    
    
    
    
    
    
    
    
    AverageFair Value
    
    Interest
    
    
    
    
    
    Fair Value
    
    InterestMaturity
    
    (In millions)
    
    Rate
    
    Maturity
    
    (In millions)
    
    RateCash equivalents, fixed rate
    
    0  1 months
    
    $
    148.9
    
    
    
    0.30
    %
    
    0  3 months
    
    $
    233.8
    
    
    
    0.53
    %Marketable securities,
fixed rate
    
    0  12 months
    
    $
    314.6
    
    
    
    0.69
    %
    
    0  12 months
    
    $
    222.9
    
    
    
    0.87
    %
 Liquidity Risk
  Foreign Currency Exchange Rate Risk
  18




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Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures:
 Changes in Internal Control over Financial Reporting:
 Inherent Limitations on Effectiveness of Controls:
 19




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PART II: OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
 You should carefully consider the risks described below, together with all of the other information
included in this report, in considering our business and prospects. The risks and uncertainties
described below contain forward-looking statements, and our actual results may differ materially
from those discussed here. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial also may impair our business operations. Each of these risk factors could
adversely affect our business, operating results and financial condition, as well as adversely
affect the value of an investment in our common stock.
 We have marked with an asterisk (*) those risk factors below that reflect material changes from the
risk factors included in our 2008 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 25, 2009.
 Nexavar ® (sorafenib) tablets is our only approved product. If Nexavar fails and we are
unable to develop and commercialize alternative product candidates our business would fail.
  There are several competing therapies approved and in development for the treatment of advanced
kidney cancer. If Nexavar is unable to successfully compete against existing and future therapies
in advanced kidney cancer, our business would be harmed.
    There are several existing approaches and several therapies in development for the treatment of
liver cancer. If Nexavar is unable to successfully compete against existing and future therapies in
liver cancer, our business would be harmed.*
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Although Nexavar has been approved in the United States, the European Union and other territories
for the treatment of patients with liver cancer, adoption may be slow or limited for a variety of
reasons including the geographic distribution of the patient population, the current treatment
paradigm for liver cancer patients, the underlying liver disease present in most liver cancer
patients and limited reimbursement. If Nexavar is not broadly adopted for the treatment of liver
cancer, our business would be harmed.
   If our ongoing and planned clinical trials fail to demonstrate that Nexavar is safe and effective
or we are unable to obtain necessary regulatory approvals, we will be unable to expand the
commercial market for Nexavar and our business may fail.
    21




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We are dependent upon our collaborative relationship with Bayer to further develop, manufacture and
commercialize Nexavar. There may be circumstances that delay or prevent Bayers ability to develop,
manufacture and commercialize Nexavar.
   
    
    adverse decisions by Bayer regarding the amount and timing of resource expenditures for the
development and commercialization of Nexavar;
    
    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;
    
    the development or acquisition by Bayer of competing products. For example, Bayer is developing a drug candidate, BAY 73-4506, in Phase 2 clinical trails for kidney cancer. We believe that Onyx has rights to this drug candidate under the terms of our Collaboration Agreement with Bayer and Bayer has asserted that we have no such rights. We and Bayer are currently in negotiations to determine the status of the drug candidate;
    
    adverse regulatory or legal action against Bayer resulting from failure to meet healthcare industry
compliance requirements in the promotion, sale, or federal and state reporting of Nexavar;
    
    changes in key management personnel at Bayer that are members of the collaborations executive team; and
    
    possible disagreements with Bayer regarding the collaboration agreement or ownership of proprietary rights.
   22




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We face intense competition and rapid technological change, and many of our competitors have
substantially greater resources than we have.
   
    
    developing products;
    
    undertaking preclinical testing and human clinical trials;
    
    obtaining FDA and other regulatory approvals of products; and
    
    manufacturing and marketing products.
     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.
 23




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The market may not accept our products and pharmaceutical pricing and reimbursement pressures may
reduce profitability.
   24




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
    
    rate of adoption by healthcare practitioners;
    
    treatment guidelines issued by government and non-government agencies;
    
    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.
  Unstable market and economic conditions may have serious adverse consequences on our business.*
  Our clinical trials could take longer to complete than we project or may not be completed at all.
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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.
  We are subject to extensive government regulation, which can be costly, time consuming and subject
us to unanticipated delays. If we are unable to obtain or maintain regulatory approvals for our
products, compounds or product candidates, we will not be able to market or further develop them.
     26




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We are dependent on the efforts of Bayer to market and promote Nexavar.
     We are dependent on the efforts of and funding by Bayer for the development of Nexavar.
  ONX 0801 may not be developed successfully, which would adversely affect our prospects for
future revenue growth and our stock price.
  27




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
    
    preclinical tests may show the product to be toxic or lack efficacy in animal models;
    
    clinical trial results may show the product to be less effective than desired or to have harmful or
problematic side effects;
    
    the necessary regulatory approvals may not be received, or may be delayed due to factors such as slow
enrollment in clinical studies, extended length of time to achieve study endpoints, additional time
requirements for data analysis or preparation of the investigational new drug application (IND),
discussions with regulatory authorities, requests from regulatory authorities for additional
pre-clinical or clinical data, analyses or changes to study design, or unexpected safety, efficacy or
manufacturing issues;
    
    difficulties formulating the product, scaling the manufacturing process or in getting approval for
manufacturing;
    
    manufacturing costs, pricing or reimbursement issues, or other factors may make the product uneconomical;
    
    the proprietary rights of others and their competing products and technologies may prevent the product
from being developed or commercialized; and
    
    the contractual rights of our collaborators or others may prevent the product from being developed or
commercialized.
  We do not have the manufacturing expertise or capabilities for any current and future products and
are dependent on others to fulfill our manufacturing needs, which could result in lost sales and
the delay of clinical trials or regulatory approval.
   If Bayers business strategy changes, it may adversely affect our collaborative relationship.
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We have a history of losses, and we may continue to incur losses.
   If we lose our key employees or are unable to attract or retain qualified personnel, our business
could suffer.
  We may need additional funds, and our future access to capital is uncertain.
  
    
    revenue from our product sales;
    
    global product development and commercialization activities;
    
    the cost involved in enforcing patent claims against third parties and defending claims by third parties;
    
    the costs associated with acquisitions or licenses of additional products;
    
    competing technological and market developments;
    
    repayment of our of milestone-based advances to Bayer, and
    
    future fee and milestone payments to BTG and S*BIO.
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##### Table of Contents



If the specialty pharmacies and distributors that we and Bayer rely upon to sell Nexavar 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; and
    
    cease operations.
  We or Bayer may not be able to protect our intellectual property, which gives us the power to
exclude third parties from using Nexavar, or we may not be able to 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, particularly
generic drug manufacturers. In the United States, for drugs deemed a
new chemical entity, such as Nexavar, FDA regulations preclude the
filing of an abbreviated new drug application, or ANDA, that contains
a challenge to the patents, prior to the four year anniversary of
marketing approval. As such, we expect that one or more generic drug
manufacturers will file an ANDA near the end of 2009, which will be
the four year anniversary of Nexavars United States marketing
approval.
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Limited foreign intellectual property protection and compulsory licensing could limit our revenue
opportunities.*
  31




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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 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.
  32




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If we do not receive timely and accurate financial information from Bayer regarding the development
and sale of Nexavar, we may be unable to accurately report our results of operations.
  Provisions in our collaboration agreement with Bayer may prevent or delay a change in control.
  Our stock price is volatile.
  
    
    fluctuations in our results of operations;
    
    development progress of our early stage compounds;
    
    decisions by regulatory agencies, or changes in regulatory requirements;
    
    ability to accrue patients into clinical trials;
    
    developments in our relationship with Bayer;
    
    public concern as to the safety and efficacy of our product candidates;
    
    changes in healthcare reimbursement policies;
    
    announcements by us or our competitors of technological innovations or new commercial therapeutic products;
    
    government regulation;
    
    developments in patent or other proprietary rights or litigation brought against us;
    
    sales by us of our common stock or debt securities;
    
    foreign currency fluctuations, which would affect our share of collaboration profits or losses; and
    
    general market conditions.
 33




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Existing stockholders have significant influence over us.
   A portion of our investment portfolio is invested in auction rate securities, and if auctions
continue to fail for amounts we have invested, our investment will not be liquid. If the issuer of
an auction rate security that we hold is unable to successfully close future auctions and their
credit rating deteriorates, we may be required to adjust the carrying value of our investment
through an impairment charge to earnings.
  We are at risk of securities class action litigation due to our expected stock price volatility.
  Our operating results could be adversely affected by product sales occurring outside the United
States and fluctuations in the value of the United States dollar against foreign currencies.
  34




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Provisions in Delaware law, our charter and executive change of control agreements we have entered
into may prevent or delay a change of control.
  
    
    the board of directors approved the transaction where the stockholder
acquired 15% or more of the corporations stock;
    
    after the transaction in which the stockholder acquired 15% or more of
the corporations stock, the stockholder owned at least 85% 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 10% or more of the stockholders entitled to vote at the meeting; and
    
    no cumulative voting.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3. Defaults Upon Senior Securities.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
 3.1 (1)
    
    Restated Certificate of Incorporation of the Company.3.2 (2)
    
    Amended and Restated Bylaws of the Company.3.3 (3)
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation.3.4 (4)
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation.4.1
    
    Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.4.2 (1)
    
    Specimen Stock Certificate.10.19 +
    
    Bonuses for Fiscal Year 2008 and Base Salaries for Fiscal Year 2009 for Executive Officers.10.20(ii) +
    
    Amendment to Executive Employment Agreement between the Company and N. Anthony Coles,
M.D., effective as of March 12, 2009.10.28(i) +
    
    Letter Agreement between the Company and Juergen Lasowski, Ph.D., dated April 28, 2008.10.28(ii) +
    
    Amendment to Letter Agreement between the Company and Juergen Lasowski, Ph.D., effective
as of March 12, 2009.31.1 (5)
    
    Certification of Chief Executive Officer as required by Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended.31.2 (5)
    
    Certification of Chief Financial Officer as required by Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended.32.1 (5)
    
    Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act
of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code
(18 U.S.C. 1350).
 
 +
    
    Management contract or compensatory plan.(1)
    
    Filed as an exhibit to the Companys Registration Statement on Form SB-2 (No. 333-3176-LA).(2)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on December 5, 2008.(3)
    
    Filed as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000.(4)
    
    Filed as an exhibit to the Companys Registration Statement on Form S-3 (No. 333-134565)
filed on May 30, 2006.(5)
    
    This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not
deemed filed with the Securities and Exchange Commission and is not to be incorporated by
reference into any filing of Onyx Pharmaceuticals, Inc. under the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended (whether made before or after the date
of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language
contained in such filing. 36




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SIGNATURES
  ONYX PHARMACEUTICALS, INC.Date: May 11, 2009
    By:
    /s/ N. Anthony ColesN. Anthony ColesPresident and Chief Executive Officer
(Principal Executive Officer)Date: May 11, 2009
    By:
    /s/ Matthew K. FustMatthew K. FustExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 37




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EXHIBIT INDEX
 3.1 (1)
    
    Restated Certificate of Incorporation of the Company.3.2 (2)
    
    Amended and Restated Bylaws of the Company.3.3 (3)
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation.3.4 (4)
    
    Certificate of Amendment to Amended and Restated Certificate of Incorporation.4.1
    
    Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4.4.2 (1)
    
    Specimen Stock Certificate.10.19 +
    
    Bonuses for Fiscal Year 2008 and Base Salaries for Fiscal Year 2009 for Executive Officers.10.20(ii) +
    
    Amendment to Executive Employment Agreement between the Company and N. Anthony Coles,
M.D., effective as of March 12, 2009.10.28(i) +
    
    Letter Agreement between the Company and Juergen Lasowksi, Ph.D., dated April 28, 2008.10.28(ii) +
    
    Amendment to Letter Agreement between the Company and Juergen Lasowski, Ph.D., effective
as of March 12, 2009.31.1 (5)
    
    Certification of Chief Executive Officer as required by Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended.31.2 (5)
    
    Certification of Chief Financial Officer as required by Rule 13a-14(a) or Rule 15d-14(a)
of the Securities Exchange Act of 1934, as amended.32.1 (5)
    
    Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act
of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code
(18 U.S.C. 1350).
 
 +
    
    Management contract or compensatory plan.(1)
    
    Filed as an exhibit to the Companys Registration Statement on Form SB-2 (No. 333-3176-LA).(2)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on December 5, 2008.(3)
    
    Filed as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000.(4)
    
    Filed as an exhibit to the Companys Registration Statement on Form S-3 (No. 333-134565)
filed on May 30, 2006.(5)
    
    This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not
deemed filed with the Securities and Exchange Commission and is not to be incorporated by
reference into any filing of Onyx Pharmaceuticals, Inc. under the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended (whether made before or after the date
of the Quarterly Report on Form 10-Q), irrespective of any general incorporation language
contained in such filing. 38