Analyst Conference Call Summary


Onyx Pharmaceuticals

conference date: May 4, 2011 @ 5:00 AM Pacific Time
for quarter ending: March 31, 2011 (first quarter 2011)

Forward-looking statements

Overview: Out of control spending leads to heavy net loss.

Basic data (GAAP) :

Revenues were $67.1 million, down 4% sequentially from $70.0 million but up 7% from $62.9 million year-earlier.

Net income was negative $49.2 million, down sequentially from negative $17.1 million and down from negative $12.0 million year-earlier.

EPS (earnings per share) were negative $0.78, down from negative $0.27 and down from negative $0.19 year-earlier.

Comparisons: ONXX Q4 2010; ONXX Q1 2010


Nexavar global sales by Bayer of $975 million to $1.025 billion for full year 2011, unchanged. $225 to $250 million R&D expense for 2011, excluding S*BIO charge.

Conference Highlights:

Non-GAAP net loss was $14.2 million, worse than the net loss of $1.5 million year-earlier. Non-GAAP EPS was negative $0.23, down from $0.02 year-earlier.

"The NDA for carfilzomib in relapsed and refractory multiple myeloma is on track for filing [this summer]... We are ramping up our preparation for the commercialization of carfilzomib, in anticipation of a potential U.S. launch next year." Believes data supports carfilzomib playing a unique role in treating multiple myeloma.

Nexavar (sorafenib) for liver cancer and kidney cancer global sales by partner Bayer were $235.5 million, up 10% y/y. $54 million in U.S., $181 million outside U.S., with China growing rapidly. All Onyx revenues are from the collaboration. Continues trials for other forms of cancer, including thyroid, breast, and lung, as well as more liver cancer trials.

Operating expenses increased to $108.5 million from $71.7 million year earlier. They included: $62.5 million for research and development; $34.5 million selling, general, and administrative; and a contingent consideration of $11.5 million for milestone payments under the Proteolix acquisition. Operating loss was $41.3 million. Other expense was $7.9 million. Income tax provision near zero. Non-cash stock-based compensation included in expenses was $5.4 million. R&D expense includes a $12.7 non-cash charge to the unamortized funding provided to S*BIO (write-down of prepaid expense).

Increased R&D expense was largely for Phase 3 carfilzomib trials. Employee costs are also rising to prepare for the carfilzomib launch. One Phase 3 trial (FOCUS) amended to expand to be more supportive of approval in Europe. Could see a data readout prior to completion of the full study.

ONX 912 oral agent for blood cancers to begin Phase 2 studies in second half of 2011. Will not develop ONX 803 and 805, which were from S*BIO.

See also Onyx Pharmaceuticals clinical pipeline.

Cash and investment balance was $561.7 million.

Trial date with Bayer in June. Believes Onyx position and claims have merit. Judge denied summary judgment motion by Bayer.


Interim data points in carfilzomib FOCUS trial? Enrollment going well, adding new sites. Interim points are driven by survival events. Will not play a role in NDA submission in U.S.

Carfilzomib ASPIRE trial enrollment? Going well, but not all sites are up yet. Very confident will complete enrollment in first half of 2012.

There is excitement about carfilzomib for the front line because of the strength of the data already released. More data to be released tomorrow.

Bayer collaboration margin? Was 62% in Q1, up from 2010. Expect to see variability, but above 60%, in 2011.

Korea and Taiwan Nexavar approvals? Received reimbursement approval in S. Korea in early 2011. Asia as a whole has grown dramatically. Taiwan approval could come later this year. Over half of all liver cancer is in Asia.

Bayer litigation impact? June trial could be appealed, but should have a lot of clarity when trial concludes.

S*BIO drop? JAK inhibitor data intriguing. Preferred to invest R&D in opportunities with closer horizons.

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Copyright 2011 William P. Meyers