conference date: May 4, 2010 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2010 (first quarter 2010)
Overview: Spending on potential therapy research pushes Onyx back into the red.
Basic data (GAAP) :
Revenues from joint unconsolidated venture with Bayer were $62.9 million, down 7% sequentially from $67.3 million, but up 17% from $53.7 million year-earlier.
Net income was negative $12.0 million, down sequentially from negative $5.5 million and well down from positive $4.1 million year-earlier.
EPS (earnings per share) were negative $0.19, down sequentially from negative $0.09 and also down from positive $0.07 year-earlier.
For full 2010 $35 to $55 million increase of R&D expense compared to full 2009. Full 2010 global Nexavar sales $925 to $975 million. Expects non-GAAP profitability in 2010.
Nexavar (sorafenib) for liver cancer and kidney cancer global sales by partner Bayer were $214.4 million, down sequentially from $235.2 million, but up 20% from $178.1 million in the year-earlier quarter. $54 million of sales were in the U.S. Sales fell short of expectations due to slower than expected growth in Japan and unfavorable exchange rates.
"The net loss for the first quarter 2010 reflected an increase in research and development expenses primarily due to the development efforts of carfilzomib and interest expense on the convertible senior notes issued in August 2009." The Proteolix acquisition resulted in a larger headcount and consequent expenses, but also three compelling compounds. Carfilzomib for multiple myeloma could launch as early as 2011, based on either the Phase 2b results or two Phase III studies to be launched soon.
Strategy is to become an oncology power by investing in new therapies and extending use of Nexavar. Has candidates that have the potential to be best-in-class. Nexavar for breast cancer and lung cancer studies have been promising.
Made a new agreement with S*BIO for the development of JAK2 inhibitors.
The liver cancer patient population is growing because of the prevalence of hepatitis C. Nexavar sales in Asia are expected to expand when reimbursements are approved. In kidney cancer the number of treatment options are growing, putting pressure on Nexavar's market share. Nexavar was approved in Taiwan; typically reimbusement approval would follow in about one year.
Non-GAAP net loss was $1.5 million or $0.02 per share.
Cash and equivalents ended at $585.2 million, down $2.1 million sequentially.
Research and development expense at Onyx, outside the Bayer collaboration, increased to $43.6 million from $28.8 million year-earlier. Selling, general, and administrative expense rose to $24.7 million, and there was a "contingent consideration" of $3.4 million, for total operating expense of $71.7 million. Leaving a loss from operations of $8.8 million, with other loss of $3.9 million. Income tax benefit was $0.7 million. Non-cash stock based compensation expense included was $4.9 million.
Non-small cell lung cancer Nexavar Phase III study results due midyear. RAS pathway kRAS mutation biomarked patients appear to respond best to Nexavar, but there was compelling evidence of benefit in both groups. This differentiates it from other kinase inhibitors. In second half of 2010 will start a pivotal Phase III combination trial for breast cancer.
In April paid $40 million milestone payment to Proteolix, but that was accrued, it won't appear as a cash payment.
Nexavar renal cell (kidney) sales trend? Looking at a 15 to 20% global share. Growth in liver cancer sales should outpace any losses in kidney cancer.
Toxicity management in Nexavar trials? Hand-foot skin reactions are now an effectively managed side affect.
South Korea? Reimbursement is expected in the later half of 2010. But not likely to be significant contributor until 2011.
Pricing and exchange rates in guidance? We looked at a range of scenarios. Dollar's strength has caused us to rebuild our guidance model. Pricing varies by geography, and is managed by Bayer; built into guidance.
S*BIO transaction is a follow up on 2008 agreement. Onyx is making a cash payment, S*BIO will do the development. The $20 million payment will be classified as corporate development rather than as a R&D expense.
NEXUS v. ESCAPE study? Main difference is chemotherapy backbone. In lung cancer we are also trying monotherapy. We believe we have found what we need to have an important place in lung cancer treatment.
Marketing spend? Expenses are lower in general in March quarters. Spend on marketing is targetted to margins, and since we are moving out of the launch phase, marketing expenses don't need to be as high.
What is delaying China reimbursement to 2011? We expect reimbursement in 2011. The drug is approved and there is a private pay market in China already. Almost 300,000 patients die in China of liver cancer each year. The process requires numerous conversations with numerous provinces, but Bayer is well established in China.
JAK2 inhibitors v. competition? These are the only compounds in the class that have demonstrated efficacy and a good safety profile (others showed neural toxicity). This is a very smart move by Onyx to accelerate the program.
Many companies have offered to be global partners for Carfilzomib.
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