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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 June 30, 2008
 or
 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
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



INDEX
 PagePART I: FINANCIAL INFORMATIONItem 1.Financial Statements (Unaudited)Condensed Balance Sheets  June 30, 2008 and December 31, 2007
    
    
    3Condensed Statements of Operations  Three and six months ended June 30, 2008 and 2007
    
    
    4Condensed Statements of Cash Flows  Six months ended June 30, 2008 and 2007
    
    
    5Notes to Condensed Financial Statements
    
    
    6Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4.Controls and Procedures
    
    
    16PART II: OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    17Item 1A.Risk Factors
    
    
    17Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3.Defaults Upon Senior Securities
    
    
    30Item 4.Submission of Matters to a Vote of Security Holders
    
    
    31Item 5.Other Information
    
    
    31Item 6.Exhibits
    
    
    31SIGNATURESEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




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PART I: FINANCIAL INFORMATION
 
 Item 1. Financial Statements (Unaudited)
 
 CONDENSED BALANCE SHEETS
 June 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)
    
    
    (Note 1)(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    236,947
    
    
    $
    161,653Marketable securities
    
    
    190,438
    
    
    
    307,997Receivable from collaboration partner
    
    
    30,293
    
    
    
    4,702Prepaid expenses and other current assets
    
    
    9,419
    
    
    
    6,304Total current assets
    
    
    467,097
    
    
    
    480,656Marketable
securities, non-current
    
    
    43,830
    
    
    
    Property and equipment, net
    
    
    2,529
    
    
    
    3,146Other assets
    
    
    274
    
    
    
    281$
    513,730
    
    
    $
    484,083LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    1,127
    
    
    $
    271Payable to collaboration partner
    
    
    5,511
    
    
    
    Accrued liabilities
    
    
    3,718
    
    
    
    2,065Accrued clinical trials and related expenses
    
    
    5,442
    
    
    
    3,323Accrued compensation
    
    
    3,801
    
    
    
    5,782Total current liabilities
    
    
    19,599
    
    
    
    11,441Advance from collaboration partner
    
    
    24,861
    
    
    
    39,234Deferred rent and lease incentives
    
    
    1,218
    
    
    
    1,171Commitments and contingenciesStockholders equity:Common stock
    
    
    56
    
    
    
    56Receivable from stock option exercises
    
    
    (240
    )
    
    
    (23
    )Additional paid-in capital
    
    
    922,085
    
    
    
    904,506Accumulated other comprehensive gain (loss)
    
    
    (1,083
    )
    
    
    356Accumulated deficit
    
    
    (452,766
    )
    
    
    (472,658
    )Total stockholders equity
    
    
    468,052
    
    
    
    432,237$
    513,730
    
    
    $
    484,083
  3




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CONDENSED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands, except per
    
    
    (In thousands, except pershare amounts)
    
    
    share amounts)Net revenue from unconsolidated joint business
    
    $
    30,199
    
    
    $
    7,470
    
    
    $
    67,937
    
    
    $
    10,495Operating expenses:Research and development
    
    
    8,625
    
    
    
    6,448
    
    
    
    16,062
    
    
    
    11,982Selling, general and administrative
    
    
    19,822
    
    
    
    15,712
    
    
    
    39,667
    
    
    
    28,895Total operating expenses
    
    
    28,447
    
    
    
    22,160
    
    
    
    55,729
    
    
    
    40,877Income (loss) from operations
    
    
    1,752
    
    
    
    (14,690
    )
    
    
    12,208
    
    
    
    (30,382
    )Investment income
    
    
    2,662
    
    
    
    3,864
    
    
    
    7,933
    
    
    
    7,361Income (loss) before income taxes
    
    
    4,414
    
    
    
    (10,826
    )
    
    
    20,141
    
    
    
    (23,021
    )Provision (benefit) for income taxes
    
    
    (60
    )
    
    
    
    
    
    
    249
    
    
    
    Net income (loss)
    
    $
    4,474
    
    
    $
    (10,826
    )
    
    $
    19,892
    
    
    $
    (23,021
    )Net income (loss) per share:Basic
    
    $
    0.08
    
    
    $
    (0.22
    )
    
    $
    0.36
    
    
    $
    (0.49
    )Diluted
    
    $
    0.08
    
    
    $
    (0.22
    )
    
    $
    0.35
    
    
    $
    (0.49
    )Shares used in computing net income (loss) per share:Basic
    
    
    55,675
    
    
    
    48,242
    
    
    
    55,531
    
    
    
    47,265Diluted
    
    
    56,472
    
    
    
    48,242
    
    
    
    56,534
    
    
    
    47,265
  4




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CONDENSED STATEMENTS OF CASH FLOWS
 Six Months Ended June 30,2008
    
    
    2007(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    19,892
    
    
    $
    (23,021
    )Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:Realized
gains on sales of marketable securities
    
    
    (483
    )
    
    
    Depreciation and amortization
    
    
    672
    
    
    
    434Stock-based compensation
    
    
    9,884
    
    
    
    7,145Changes in operating assets and liabilities:Receivable from collaboration partner
    
    
    (25,591
    )
    
    
    2,177Prepaid expenses and other current assets
    
    
    (3,115
    )
    
    
    (2,891
    )Other assets
    
    
    7
    
    
    
    (105
    )Accounts payable
    
    
    856
    
    
    
    257Payable to collaboration partner
    
    
    
    
    
    
    (8,391
    )Accrued liabilities
    
    
    1,653
    
    
    
    500Accrued clinical trials and related expenses
    
    
    2,119
    
    
    
    (4,605
    )Accrued compensation
    
    
    (1,981
    )
    
    
    111Deferred rent and lease incentives
    
    
    47
    
    
    
    727Net cash provided by (used in) operating activities
    
    
    3,960
    
    
    
    (27,662
    )Cash flows from investing activities:Purchases of marketable securities
    
    
    (208,558
    )
    
    
    (175,671
    )Sales of marketable securities
    
    
    82,916
    
    
    
    Maturities of marketable securities
    
    
    198,415
    
    
    
    112,549Capital expenditures
    
    
    (55
    )
    
    
    (2,343
    )Net cash provided by (used in) investing activities
    
    
    72,718
    
    
    
    (65,465
    )Cash flows from financing activities:Purchases of treasury stock
    
    
    (529
    )
    
    
    Advance from (payment to) collaboration partner
    
    
    (8,862
    )
    
    
    Net proceeds from issuances of common stock
    
    
    8,007
    
    
    
    212,947Net cash provided by (used in) financing activities
    
    
    (1,384
    )
    
    
    212,947Net increase in cash and cash equivalents
    
    
    75,294
    
    
    
    119,820Cash and cash equivalents at beginning of period
    
    
    161,653
    
    
    
    94,413Cash and cash equivalents at end of period
    
    $
    236,947
    
    
    $
    214,233
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NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)
 Note 1. Basis of Presentation
    Note 2. Net Revenue from Unconsolidated Joint Business
    6




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)
    
    
    (In thousands)Onyxs share of collaboration profit (loss)
    
    $
    16,233
    
    
    $
    (1,405
    )
    
    $
    42,091
    
    
    $
    (5,834
    )Reimbursement of Onyxs direct development
and marketing expenses
    
    
    13,128
    
    
    
    8,875
    
    
    
    25,008
    
    
    
    16,329Royalty revenue
    
    
    838
    
    
    
    
    
    
    
    838
    
    
    
    Net revenue from unconsolidated joint business
    
    $
    30,199
    
    
    $
    7,470
    
    
    $
    67,937
    
    
    $
    10,495
  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.
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(In thousands)Money market funds
    
    $
    143,133
    
    
    $
    
    
    
    $
    
    
    
    $
    143,133Commercial paper
    
    
    
    
    
    
    69,698
    
    
    
    
    
    
    
    69,698Auction rate securities
    
    
    
    
    
    
    
    
    
    
    48,830
    
    
    
    48,830U.S. government agencies
    
    
    
    
    
    
    72,008
    
    
    
    
    
    
    
    72,008U.S. treasury bills
    
    
    134,527
    
    
    
    
    
    
    
    
    
    
    
    134,527Total
    
    $
    277,660
    
    
    $
    141,706
    
    
    $
    48,830
    
    
    $
    468,196
  7




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Auction Rate Securities(In thousands)Balance at December 31, 2007
    
    $
    50,000Unrealized loss:In other comprehensive income
    
    
    (1,170
    )In earnings
    
    
    Balance at June 30, 2008
    
    $
    48,830
  Note 4. Cash Equivalents and Marketable Securities
   Note 5. Stock-Based Compensation
  8




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Employee Stock Plans
  Valuation Assumptions
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Stock Option Plans:Risk-free interest rate
    
    
    2.89
    %
    
    
    4.58
    %
    
    
    2.85
    %
    
    
    4.70
    %Expected life
    
    4.4 years
    
    
    4.3 years
    
    
    4.4 years
    
    
    4.3 yearsExpected volatility
    
    
    64
    %
    
    
    64
    %
    
    
    64
    %
    
    
    64
    %Expected dividends
    
    None
    
    
    None
    
    
    None
    
    
    NoneWeighted average option fair value
    
    $
    18.42
    
    
    $
    16.06
    
    
    $
    17.09
    
    
    $
    13.55Stock Bonus Awards:Expected life
    
    3 years
    
    
    3 years
    
    
    3 years
    
    
    3 yearsExpected dividends
    
    None
    
    
    None
    
    
    None
    
    
    NoneWeighted average fair value per share
    
    $
    35.67
    
    
    $
    24.84
    
    
    $
    30.77
    
    
    $
    24.84ESPP:Risk-free interest rate
    
    
    3.34
    %
    
    
    5.17
    %
    
    
    3.34
    %
    
    
    5.17
    %Expected life
    
    6 months
    
    
    6 months
    
    
    6 months
    
    
    6 monthsExpected volatility
    
    
    64
    %
    
    
    60
    %
    
    
    64
    %
    
    
    60
    %Expected dividends
    
    None
    
    
    None
    
    
    None
    
    
    NoneWeighted average shares fair value
    
    $
    17.18
    
    
    $
    4.97
    
    
    $
    17.18
    
    
    $
    4.97
 Note 6. Net Income (Loss) Per Share
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Note 7. Comprehensive Income (Loss)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)
    
    
    (In thousands)Net income (loss)  as reported
    
    $
    4,474
    
    
    $
    (10,826
    )
    
    $
    19,892
    
    
    $
    (23,021
    )Other comprehensive income (loss):Change in unrealized gain (loss)
on available-for-sale securities
    
    
    405
    
    
    
    5
    
    
    
    (1,439
    )
    
    
    78Comprehensive income (loss)
    
    $
    4,879
    
    
    $
    (10,821
    )
    
    $
    18,453
    
    
    $
    (22,943
    )
 Note 8. Long-Term Obligations
  Note 9. Income Taxes
   10




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The Quarterly Report on Form 10-Q, including 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 and the development and commercialization of Nexavar. Forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ materially from those projected.
You should not place undue reliance on
these forward-looking statements, which speak 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. Except as required by law, we expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained herein to reflect any
change in our expectations with regard thereto or any change in events, conditions or circumstances
on which any such statement
is based.
 Overview
 changing the way cancer is treated TM ® ®
    11




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Critical Accounting Policies and the Use of Estimates
  Results of Operations
 Three and six months ended June 30, 2008 and 2007
 Revenue
  Net Revenue from Unconsolidated Joint Business
   12




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Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007(In thousands)Nexavar product revenue, net (as recorded by
Bayer)
    
    $
    168,520
    
    
    $
    81,332
    
    
    $
    320,416
    
    
    $
    142,212Revenue
subject to profit sharing, (as recorded by Bayer)
    
    
    156,547
    
    
    
    81,332
    
    
    
    308,443
    
    
    
    142,212Combined cost of goods sold, distribution,
selling, general and administrative expenses
    
    
    80,135
    
    
    
    49,285
    
    
    
    142,838
    
    
    
    85,734Combined research and development expenses
    
    
    43,946
    
    
    
    34,856
    
    
    
    81,424
    
    
    
    68,146Combined collaboration profit (loss)
    
    $
    32,466
    
    
    $
    (2,809
    )
    
    $
    84,181
    
    
    $
    (11,668
    )Onyxs share of collaboration profit (loss)
    
    $
    16,233
    
    
    $
    (1,405
    )
    
    $
    42,091
    
    
    $
    (5,834
    )Reimbursement of Onyxs direct development
and marketing expenses
    
    
    13,128
    
    
    
    8,875
    
    
    
    25,008
    
    
    
    16,329Royalty revenue
    
    
    838
    
    
    
    
    
    
    
    838
    
    
    
    Net revenue from unconsolidated joint business
    
    $
    30,199
    
    
    $
    7,470
    
    
    $
    67,937
    
    
    $
    10,495
   Research and Development Expenses
    13




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Selling, General and Administrative Expenses
   Investment Income
  Liquidity and Capital Resources
      14




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Recently Issued Accounting Standards
  15




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
   June 30, 2008
    
    December 31, 2007Average
    
    
    
    
    
    
    
    
    
    AverageFair Value
    
    Interest
    
    
    
    
    
    Fair Value
    
    InterestMaturity
    
    (In millions)
    
    Rate
    
    Maturity
    
    (In millions)
    
    RateCash equivalents, fixed rate
    
    0 - 3 months
    
    $
    233.9
    
    
    
    1.97
    %
    
    0 - 2 months
    
    $
    160.0
    
    
    
    4.79
    %Marketable securities,
fixed rate
    
    0 - 18 months
    
    $
    234.3
    
    
    
    2.19
    %
    
    0 - 12 months
    
    $
    308.0
    
    
    
    4.75
    %
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures:
 Changes in Internal Control over Financial Reporting:
 Inherent Limitations on Effectiveness of Controls:
 16




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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. 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 2007 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 28, 2008.
 Nexavar ® (sorafenib) tablets is our only product. If Nexavar is not commercially
successful and we are unable to develop and commercialize alternative product candidates our
business would fail.*
  There are several therapies approved as well as several therapies 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.*
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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.*
  Although Nexavar has been approved in the United States, 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.*
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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
development, 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;
    
    withdrawal of support by Bayer following the development or acquisition by it of
competing products;
    
    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.
   We face intense competition and rapid technological change, and many of our competitors have
substantially greater resources than we have.
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
    
    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.
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The market may not accept our products and pharmaceutical pricing and reimbursement pressures may
reduce profitability.
    
    
    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.
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Our clinical trials could take longer to complete than we project or may not be completed at all.
   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.
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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 Nexavar.
  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.
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If Bayers business strategy changes, it may adversely affect our collaborative relationship.
  We have a history of losses, and we may continue to incur losses.
   If we lose our key employees and consultants 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.
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
    
    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; and
    
    repayment of our of milestone-based advances.
   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; 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.
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Limited foreign intellectual property protection and compulsory licensing could limit our revenue
opportunities.*
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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.
  If we do not receive timely and accurate financial and market information from Bayer regarding the
development and sale of Nexavar, we may be unable to accurately report our results of operations.
  27




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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;
    
    interim or final results of, or speculation about, clinical trials of Nexavar, such
as the announcement that we and Bayer had stopped the Phase 3 clinical trial of Nexavar
in combination with carboplatin and paclitaxel in patients with NSCLC;
    
    decision 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, including sales under our
committed equity financing facility arrangement with Azimuth;
    
    foreign currency fluctuations, which would affect our share of collaboration profits
or losses; and
    
    general market conditions.
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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.
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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.
   
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
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Item 4. Submission of Matters to a Vote of Security Holders
  (a)
    
    Both of the nominees of the Board of Directors were elected to serve until our annual
meeting of stockholders in 2011. The nominees were: Magnus Lundberg; 44,804,575 common
shares for, none against and 257,378 withheld; and N. Anthony Coles; 44,795,049 common
shares for, none against and 266,904 withheld. The term of office of directors Paul
Goddard, Ph.D, Antonio J. Grillo-Lopez, M.D., and Wendell Wierenga, Ph.D, continues until
our annual meeting of stockholders in 2009. The term of office of directors Corinne H.
Lyle and Thomas G. Wiggans, continues until our annual meeting of stockholders in 2010.(b)
    
    The stockholders approved the amendment to the Companys Equity Incentive Plan to
increase the aggregate number of shares of Common Stock authorized for issuance under the
plan by 3,100,000 shares: 35,616,759 common shares for, 2,912,011 against, 24,954
abstaining and 6,508,229 broker non-votes.(c)
    
    The stockholders ratified the selection by the Audit Committee of the Board of
Directors of Ernst &Young LLP as our independent registered public accounting firm for our
fiscal year ending December 31, 2008: 44,933,738 common shares for, 101,999 against and
26,215 abstaining.
 
 Item 5. Other Information
  
 Item 6. Exhibits3.1 (1)
    
    Restated Certificate of Incorporation of the Company.3.2 (2)
    
    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.10.9 (6) +
    
    Form of Onyx Pharmaceuticals, Inc.
Executive Change in Control Severance Benefits Agreement.10.13 (5)
    
    2005 Equity Incentive Plan.10.25(7) +
    
    Separation and Consulting Agreement between Onyx Pharmaceuticals, Inc. and
Gregory W. Schafer, dated June 23, 2008.31.1 (8)
    
    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 (8)
    
    Certification of Principal 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 (8)
    
    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. 31




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(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 May 25, 2007.(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)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on May 15, 2008(6)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 10, 2008.(7)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 23, 2008.(8)
    
    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. 32




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SIGNATURES
  ONYX PHARMACEUTICALS, INC.Date: August 5, 2008
    By:
    /s/ N. Anthony ColesN. Anthony ColesPresident and Chief Executive Officer
(Principal Executive Officer)Date: August 5, 2008
    By:
    /s/ Gregory W. SchaferGregory W. SchaferVice President and Chief Financial Officer
(Principal Financial and Accounting Officer) 33




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EXHIBIT INDEX
 3.1 (1)
    
    Restated Certificate of Incorporation of the Company.3.2 (2)
    
    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.10.9 (6) +
    
    Form of Onyx Pharmaceuticals, Inc. Executive Change in Control Severance
Benefits Agreement.10.13 (5)
    
    2005 Equity Incentive Plan.10.25
(7) +
    
    Separation and Consulting Agreement between Onyx Pharmaceuticals, Inc. and
Gregory W. Schafer, dated June 23, 2008.31.1 (8)
    
    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 (8)
    
    Certification of Principal 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 (8)
    
    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 May 25, 2007.(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)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on May 15, 2008(6)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 10, 2008.(7)
    
    Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 23, 2008.(8)
    
    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. 34