conference date: May 6, 2009 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2009 (1st quarter 2009)
Overview: Continues to see Nexavar revenue gains, but they are offset by increased research expenses.
Basic data (GAAP) :
Revenues from joint unconsolidated venture with Bayer were $53.7 million, up 8% sequentially from $49.6 million and up 10% from $48.9 million year-earlier.
Net income was $4.1 million, up sequentially from negative $30.2 million but down from $15.4 million year-earlier.
EPS (earnings per share) were $0.07, up sequentially from negative $0.53, but lower than the $0.27 reported year-earlier.
Reiterating $850 to $875 million global Nexavar sales by Bayer in full 2009.
Expect a 5% increase in operating expenses for 2009, over the rate in Q4 2008 excluding one-time items.
Now seeing some impact from global economic slowdown. This was seen in inventory controls at pharmacies in the U.S., plus apparently some anticipatory buying in Q4 2008. These trends appear to have worked their way through. Also, the weaker Euro in Q1 resulted in lesser dollar amounts for Onyx.
Still expanding into large untapped liver cancer market with Nexavar, where it is the only approved oral therapy. Believes it is still on track to be a blockbuster drug. There are still many nations that have not approved Nexavar, or that are just ramping up sales. Now approved in South Korea, but awaiting reimbursement approval.
In kidney cancer Nexavar remains an important treatment as sequential use of differing therapies becomes a more common practice.
Hundreds of clinical studies of Nexavar for various cancers continue. Also building a pipeline of potential new products.
Non-GAAP net income was $8.1 million, or $0.14 per share, down substantially from $20.6 million year-earlier due to increased clinical trial costs.
Research and development expense climbed to $28.8 million, and general and administrative expense climbed to $22.0 million, resulting in total GAAP operating expenses of $50.8 million. Leaving income from operations of $3.0 million. Other income was $1.1 million. GAAP numbers include employee stock-based compensation expense of $4.0 million.
Even though Nexavar revenue reported by Bayer climbed 17% to $178.1 million from $151.9 million year-earlier, revenue subject to profit sharing grew only to $167.0 million, and costs climbed to $71.9 million. Leaving the profit at $95.1 million. Onyx's share was $47.5 million, plus $5.4 million cost reimbursement and $0.8 million royalties.
Cash and equivalents ended at $467.1, up $9.1 million in the quarter. No debt.
Of Bayer's sales, $48 million were in the U.S., $130 million international.
Key Nexavar trials include a Phase II trial for colorectal cancer, in combination with chemotherapy. Trials underway for non-small cell lung cancer. Also trials underway or planned for thyroid cancer and breast cancer.
ONX 0801, ONX 0803, ONX 0805 all in pipeline, at preclinical stage.
Main upside drivers? We expect growth in each region for liver cancer. Japan launch - they have 2 times the cases per year as in the U.S. Eastern European launches. In Korea and China we are approved but awaiting reimbursement approvals.
Was European growth flat sequentially, where is it headed? In 2008 sales accelerated in big 4 Euro nations - Germany, Italy, France and Spain. Demographics support continued sales growth outside these countries as well. Eastern Europe is not a strong market for kidney cancer, but should be for liver cancer. Greece, Turkey, Scandinavia, and Russia also should be growth areas going forward.
Decline in Japan sales sequentially? We are still in early launch phase, we believe it is just a random fluctuation after the startup. Do not believe it is a result of economic or pricing pressures.
Taiwan? We are awaiting both approval and reimbursement approval.
Non-Nexavar related R&D expense? Level on ONX 0801 is relatively low, as it is pre-clinical.
Is RCC (renal or kidney cancer) revenue flat going forward as it has been for the last year? Expansion is mainly going to be in liver cancer, with growth in U.S. but greatest growth outside U.S.
Is Nexavar for RCC in Eastern Europe? Yes, we are well established in kidney cancer there and in over 70 countries. But the greater opportunity is in liver cancer.
Duration of therapy? When we enter a market, duration is short as sickest patients die relatively quickly. Then duration expands.
Unit growth? Strong unit growth, understated due to currency exchange issue. We don't provide details on units.
There was a January price increase of 8% in the U.S.
Competition for Infinitor(sp?)? Kidney cancer patients are living longer due to sequential and parallel use of multiple therapies. We are comfortable about how we are approaching this market place.
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