Analyst Conference Summary

Onyx Pharmaceuticals

conference date: May 9, 2007 @ 2:00 Pacific Time
for quarter ending: March 31, 2006 (1st Quarter)

Partial summary; full summary soon.

Overview: Still spending more to develop Nexavar than they are getting in revenues, but excited about adding liver cancer soon as an approved use.

Basic data:

Net Nexavar revenue recorded by Bayer was $60.9 million, down 4.4% sequentially but up 157% from 23.7 million year-earlier.

Net loss was $12.2 million or $0.26 per share, compared to net loss of $20.4 million year-earlier.

$261.8 million cash and equivalents at end of quarter.


Shared development costs will be similar in 2007 to 2006. Shared SG&A to be at Q4 2006 run rate.

Conference Highlights:

Nexavar is approved for advanced kidney cancer and is a standard of care. Adjuvant trials are continuing, is trying increasing doses.

Could launch sales for liver cancer in early 2008. Positive Nexavar outcome from Phase III liver cancer trial (so good it ended early); expecting favorable regulator reviews. No known competitors in site. Phase II trial combined with doxorubicin was also stopped, but showed patients receiving only doxorubicin were at a considerable disadvantage.

Net due amount of $3 million from Bayer in compensation for expenses (not recorded as income). This is the first net to Onyx from Bayer. Total shared research collaboration expense was $33.3 million, down sequentially. Shared sales and marketing and cost of goods sold expenses were $36.5 million, also down sequentially.

22% sequential growth outside the U.S. Revenue recorded by Bayer (the selling partner) were $60.9 million. $26 million was in U.S., $35 million outside U.S.

Operating expense: R&D $5.5 million, down significantly due to end of melanoma trials. SG&A $13.2 million, up from prior-year due to new hires to support planned growth. Negative $3 million from joint business, so total operating expense was $15.7 million.

Interest income was $3.5 million.

Expect 2007 Nexavar shared expenses to remain about the same as 2006.

Nexavar with chemotherapy melanoma Phase II trial showed increased 12 to 21 weeks in progression free survival.

Looking at non-small cell lung cancer and breast cancer. Phase III non-small cell lung cancer enrollment completion is near. Bayer is also starting a Phase III trial. Could be the first agent of this type safe for squamous-type patients.

$3.6 million stock-based compensation expense.


Off label use sales? Expect there to be a pick up in liver cancer after ASCO presentation, but there was none visible in Q1.

Lung cancer confidence? We treated squamous cell carcinoma patients already; we saw sufficient safety data to go on to Phase III plus efficacy signals. If successful will be able to claim it works regardless of the underlying histology, which no rivals do.

SG&A costs? Annualized will be like 4th quarter of 2006, about $49 million per quarter. Some launch activities outside US were completed, and kidney and melanoma trials wound down.

Pricing? 6% price increase in January in U.S. Global pricing is in a narrow band around U.S. pricing.

Decrease in U.S. sales? Underlying demand is stable despite competive setting. Community is now used to using it. $4 million decrease in quarter was due to Medicare seasonality.

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Copyright 2007 William P. Meyers