conference date: November 3, 2009 @ 2:00 PM Pacific Time
for quarter ending: September 30, 2009 (third quarter 2009)
Overview: Nexavar revenues continue to ramp rapidly, but GAAP net income did not, due to a variety of "special" expenses.
Basic data (GAAP) :
Revenues from joint unconsolidated venture with Bayer were $69.1 million, up 15% sequentially from $60.2 million and up 36% from $50.8 million year-earlier.
Net income was $8.2 million, down 13% sequentially from $9.4 million, and down 33% from $12.2 million year-earlier.
EPS (earnings per share) were $0.14, down 13% sequentially from $0.16, and down 33% from $0.21 year-earlier.
No guidance update for Q4. We are pleased with top-line growth and expense controls. However, we often see a Q4 expense bump. [8/4/2009 guidance was: $850 to $875 million in Nexavar sales for 2009, but believes not likely to reach upper end of that range.]
Global Nexavar (sorafenib) sales reported by Bayer were $229.2 million, up sequentially from $201.0 million and up 27% from $180.9 million in the year-earlier quarter.
Excluding employee stock-based compensation expense, non-cash imputed interest, acquisition-related costs and a milestone payment of $7 million for an acquired therapy, Non-GAAP Net Income was $22.2 million or $0.35 per share, up 34% from $16.6 million year-earlier.
Nexavar commercial expenses were lower, but that was offset by greater R&D expense for an expanding clinical development program, interest expense on new convertible notes, and less investment income.
R&D expense expanded for Nexavar trials for thyroid, colorectal, and adjuvant liver cancer, plus the ONX 0801 milestone payment.
Cash and equivalents ended at $843.1 million.
Operating expenses of $59.1 million included $35.6 million for R&D and $23.4 million for Selling, General and Administrative. Leaving operating income of $10.1 million. Investment income was $1.0 million, interest expense $2.2 million. Income tax provision $0.6 million.
Near term growth drivers include continuing penetration of existing markets; approval for Nexavar in Taiwan before year-end; securing reimbursement approval in Korea; top-line results from Nexus Phase III lung cancer study; and initiation of Phase III program in breast cancer. Data will be presented at a number of medical meetings. Compelling data is being generated for Nexavar in a variety of cancer types.
Proteolix acquisition could result in an FDA approval of carfilzomib by 2011. "Could not be more excited about the potential of carfilzomib." ONX 0801 is preparing for a Phase I trial.
Bayer Nexavar revenues from U.S. $56 million, outside U.S. $173 million. Expecting continued expansion in Europe. China is leading sales growth in Asia, and reimbursement approval is expected soon.
Will commercial margins continue to improve? We expect to get additional leverage in joint venture margins with Bayer. We do have several country launches coming, which increases expense.
When will operating expense increase from acquisition? $25 million net increase for Proteolix, details when we give 2010 annual guidance.
Price increases for Nexavar? Each country has a price in its own currency, but we try to keep it in a narrow band. In the U.S. there was a 10% price increase in Q3 2009.
Oral cancer drug reimbursement environment in U.S.? We have not seen a material impact on our business from the recession; demand has been growing for us.
China current sales run rate, etc.? In Q1 2009, Bayer sold $10 million, Q3 was $15 million. That is without government reimbursement.
The thyroid cancer trials have been very compelling so far. Thyroid cancer is a relatively small market, but with this treatment could become a chronic disease.
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