) --A large investor in

Onyx Pharmaceuticals


wants shareholders to have the right to approve or veto any significant deal the company may seek to do in the future.

Samuel Isaly, portfolio manager at Orbimed Advisors, which owns about 4% of Onyx, requested greater shareholder control over Onyx's deal-making decisions after the company announced a new offering of stock and debt securities.

Isaly says he's worried that Onyx's desire to raise another $300 million or more -- on top of the $460 million already in the company's coffers -- might lead management into an expensive or highly dilutive deal that won't benefit shareholders.

"Onyx has said little about how they intend to use these proceeds. We're worried about the company embarking on a transaction of significant size in which the shareholder can't vote," says Isaly.

Asked to define "significant size," Isaly says he wants Onyx to rewrite its corporate by-laws to require a shareholder vote on any transaction greater than 25% of the company's market value.

Onyx's market capitalization is currently around $2 billion, so Isaly is asking for shareholder votes on deals priced at $500 million or higher.

Onyx executives could not be reached for comment.

Isaly says he hopes to steer Onyx clear of making the same mistake

OSI Pharmaceuticals

( OSIP) made when it acquired Eyetech Pharmaceuticals in 2005 for about $1 billion. OSI engineered that deal in a way that prevented a shareholder vote, but the acquisition never delivered promised returns because Eyetech's eye drug failed commercially.

Onyx shares fell 15% to $31.18 Wednesday, the day after the company announced plans to sell 4 million shares of common stock and $200 million in convertible debt.

Onyx also reported a second-quarter profit Tuesday that beat the Street consensus estimate and guided to the lower end of the company's 2009 sales forecast for its cancer drug Nexavar.

Still, most of the questions on the company's Tuesday night conference call were about the financing plans.

"People are mad" about Onyx's fund-raising plans, said Cowen & Co. biotech analyst Phil Nadeau, who covers Onyx. Some investors, like Isaly, are worried about what Onyx might do with the money; others are concerned with the timing of the offering, he says.

"Why is Onyx raising money now shortly after announcing positive top-line data from the Nexavar breast cancer trial but before disclosing all the data from the study," Nadeau says.

Onyx CEO Tony Coles responded to this concern on Tuesday's conference call. "But let me reassure you that, as a former practicing physician, we're very confident and very comfortable with the statistical significance of these findings, and believe that when the full data set are shared with everyone, that you'll be as thrilled and as pleased as we are around these particular findings."

Nexavar is used to treat patients with kidney cancer and liver cancer. Onyx said 2009 sales would likely come in at the lower end of its $850 million to $875 million guidance range.

An expansion of Nexavar into breast cancer could bolster sales by hundreds of millions of dollars.

Nexavar is Onyx's only revenue-producing drug. The company has other drugs in the pipeline but all are in the early stages of testing.

Nexavar is marketed worldwide through a joint venture between Onyx and the German drug maker



Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

click here

to send him an email.