Analyst Conference Call Summary


Onyx Pharmaceuticals

conference date: February 22, 2012 @ 2:00 PM Pacific Time
for quarter ending: December 31, 2011 (Q4, fourth quarter 2011)

Forward-looking statements

Overview: Best quarter ever due to contract revenue from collaborations.

Basic data (GAAP) :

Revenues were $237.0 million, up % sequentially from $75.0 million and up % from $70.0 million year-earlier.

Net income was $216.7 million, way up sequentially from negative $36.9 million and also way up from negative $17.1 million year-earlier.

EPS (earnings per share) were $3.40, up sequentially from negative $0.58 and up from negative $0.27 year-earlier.

Comparisons: ONXX Q3 2011; ONXX Q4 2010


Full year 2012 Nexavar global sales by Bayer (now excluding Japan) between $840 and $860 million. Non-GAAP R&D expense $270 to $290 million, SG&A expense $170 to $180 million. Interest expense $10 million. Stock based compensation $40 million. Overall expects a non-GAAP loss. However, there could be other sources of revenue and expense like carfilzomib and milestone payments from Ono.

Conference Highlights:

GAAP revenue included $76.8 million from the Nexavar collaboration agreement and $160.2 million for sale of Japanese Nexavar royalty rights.

Non-GAAP numbers: net income $102.8 million, EPS $1.50.

For the full year 2011 Onyx managed a Non-GAAP numbers: net income $42.0 million, EPS $0.66.

Nexavar (sorafenib) for liver cancer and kidney cancer global sales by partner Bayer were $276.8 million, up sequentially from $250.3 million, and up from $257.4 million year-earlier. Nexavar demand for kidney cancer is expected to contract, but for liver cancer demand is expected to increase in 2012, for a net increase.

Cash and equivalence balance ended at $668.4 million.

"By the end of this year we hope to transform Onyx from a company with one product in two types of cancer to as many as three products in seven types of cancer."

Carfilzomib for multiple myeloma has a FDA response (PDUFA) date of July 27, but in case the Phase II data don't gain approval, one Phase III trial is fully enrolled with data possible in the first half of 2013. A second Phase III trial should complete enrollment in Q1 2013. Creating a strategy to expand into earlier lines of multiple myeloma therapy.

Nexavar for non-small cell lung cancer Phase III results expected first half of this year. Thyroid Phase III results also expected first half of this year.

See also Onyx Pharmaceuticals clinical pipeline.

GAAP operating expenses were just $15.4 million because of a contingent consideration of $116.7 million mainly related to Carfilzomib milestones, and a reversed lease termination exit cost of $4.5 million largely offset $84.0 million for research and development plus $52.6 million for selling, general and administrative expenses. Income from operations was $221.6 million, other income negative $4.7 million. Income tax provision was $0.24 million.


We thought you would spend less on R&D in Q4, more in 2012? Second half R&D run rate is indicative of 2012 rate.

Unmet need in myeloma? Rapid enrollment of ASPIRE trial is indicative of excitement about carfilzonmib's effectiveness and tolerability.

Non-small cell lung cancer status? Enrollment completion was in Q3, but then we had to wait for the target number of events in each arm. The trial has not concluded yet.

FDA carfilzomib panel? We continue to interact with the FDA about accelerated approval. We do not know if there will be an ODAC panel yet. We have said all along there is a high bar for approval in any accelerated study.

ASPIRE interim analysis would be based on a set percentage of events. If the primary endpoint is hit, the trial is stopped.

Myeloma is today a $4 to $4.5 billion market opportunity and expanding towards $8 billion, with considerable unmet needs. The full potential would include not just 3rd line use, but 2nd and 1st line use.

Regorafenib projections for $1 billion market? Based on other indications beyond colorectal cancer, including earlier lines of colorectal.

Why is there Q4 upward seasonality for Nexavar? It is a trend we have seen over several years. We saw nothing unusual in the U.S. in Q4 inventories. Medicare part D donut hole issues do hit patients in the first half of the year.

Head to head study with Velcade in 2nd line myeloma? 1st line strategy? Data already generated suggests carfilzomib is better tolerated than Velcade, and can take the drug for a longer perior, which could result in longer progression free survival. Velcade patents expire in 2013. We are contemplating a head-to-head in relapse population and a frontline study.

Growth in Nexavar for liver cancer will come from both established markets and emerging markets. Overall a 5% to 8% demand increase. China has been a strong growth area.

Nexavar for breast cancer? Not included in the 2012 7 types of cancer statement. Breast cancer is not a 2012 event.

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Copyright 2012 William P. Meyers