conference date: November 2, 2011 @ 2:00 PM Pacific Time
for quarter ending: September 30, 2011 (Q3, third quarter 2011)
Overview: Growth continues, but still missed profitability by $37 million.
Basic data (GAAP) :
Revenues were $75.0 million, up 10% sequentially from $68.0 million, but down 40% from $122.9 million in the year earlier quarter that included a one-time $59.2 million license payment.
Net income was negative $36.9 million, up sequentially from negative $54.5 million, but down from $41.5 million year-earlier.
EPS (earnings per share) were negative $0.58, up sequentially from negative $0.86, but down from positive $0.66 year-earlier.
Comparisons: ONXX Q2 2011; ONXX Q3 2010
2011 global nexavar net sales of $975 million to $1.025 billion, with lower to mid-point more likely. Commercial margins of 60% or better. Operation expense in Q4 roughly flat from Q3. Believes will be profitable non-GAAP in 2011 due to the $160 million Bayer payment for Nexavar Japanese rights.
Comparisons with the year-earlier quarter are way down due to a a one-time $59.2 million license payment from Ono Pharmaceutical in that quarter.
Since the quarter ended Onyx received a $160 million payment from Bayer in return for selling them Nexavar royalties in Japan. $15 million more possible in 2012 to 2013. But Japan royalties on nexavar will cease starting January 2012.
Plan is to fuel growth and diversify business with its proteasome inhibitor platform, including carfilzomib, which had its accelerated new drug application for multiple myeloma submitted to the FDA in September.
Recent settlement with Bayer gives Onyx a significant interest in regorafenib, a Nexavar analogue that has demonstrated positive Phase III data for colorectal (bowel) cancer. Royalties will be 20% of global revenues.
Non-GAAP numbers: net income negative $19.5 million. EPS negative $0.31.
Nexavar (sorafenib) for liver cancer and kidney cancer global sales by partner Bayer were $250.3 million, up 11% from $225.2 million year-earlier. Revenue to Onyx from that was $75.0 million, up 18% from $63.7 million year-earlier. Both China and Japan sales are expanding rapidly.
Cash and equivalence balance ended at $529.7 million, down $20.9 million sequentially from $550.6 million
Nexavar pivotal trial data for lung and thyroid cancer are expected in the next few months. Phase III HER2 negative breast cancer trial is currently enrolling. Further trial data from Nexavar for liver cancer will also read out in 2012.
Phase 3 confirmatory carfilzomib for multiple myeloma trials, ASPIRE and FOCUS, are in progress. ASPIRE should complete enrollment in the first half of 2012 with data possible in the first half of 2013. New and updated carfilzomib data will be presented at ASH in December.
ONX-912 is orally available, currently in a Ib/II trial to establish dosing.
See also Onyx Pharmaceuticals clinical pipeline.
Operating expenses of $107.2 million included: $58.5 million for research and development, $42.6 million for selling, general and administrative, and a $5.9 million contingent consideration. Investment income was $0.4 million. No income taxes.
Carfilzomib filing, ramp of commercial infrastructure? We should have word on whether the file is accepted by the end of the month. We will be up and running quickly if the FDA does approve the drug.
FOCUS interim analysis? There are two interim analysis points in the trial.
Where are operating expenses going in 2012? Kinase inhibitor nexavar has considerably more clinical expense continuing 2012. Investment in Carfilzomib manufacturing is in R&D expense line too. Guidance for 2012 expenses will be given at the year-end call.
Bayer agreement rules nexavar vs. regorafenib? They are complimentary and the agreement is silent on a head to head comparison. The idea is to expand the indication opportunities. Regorafenib data will be released appropriately next year, but safety data was consistent with earlier trials.
Nexavar sales in Europe? We don't get that level of detail from Bayer, except that sales volumes declined sequentially in Europe.
The Bayer money for nexavar for Japan helps us fulfill the commitment to being cash flow positive for 2011.
Path to profitability? We and Bayer are aligned to improve margins for Nexavar and to extend its indications. We are in investment mode for carfilzomib. Regorafenib royalties will drive they top line when they start.
ONX-912 dosing trial has just begun, we have no timeline for data.
Length of patent protection for regorafenib? IP protection goes through 2024. Nexavar ends in 2020.
Size of colorectal cancer market? 650,000 diagnosed per year worldwide, but specific type is about 5% of that.
Regorafenib Bayer trial in liver cancer? Those are nexavar refractory, illustrating the benefit of having multiple therapies in the franchise?
Overall regorafenib opportunity? The colorectal cancer opportunity is large. We will give you a pipeline update at some point, it is too early to speculate right now.
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