Analyst Conference Call Summary


Onyx Pharmaceuticals

conference date: August 1, 2012 @ 2:00 PM Pacific Time
for quarter ending: June 30, 2011 (Q2, second quarter 2012)

Forward-looking statements

Overview: Slow revenue growth and with earnings loss while launching Kyprolis, which was approved for sale in the U.S. by the FDA on July 20, 2012, after the quarter ended.

Basic data (GAAP) :

Revenues were $72.7 million, up 1% sequentially from $72.0 million and up 7% from $68.0 million in the year-earlier quarter.

Net income was negative $106.1 million, down sequentially from negative $56.2 million and also down from negative $54.5 million year-earlier.

EPS (earnings per share) were negative $1.65, down sequentially from negative $0.88 and down from negative $0.68 year-earlier.

Comparisons: ONXX Q1 2012; ONXX Q2 2011


2012 Global Nexavar guidance excluding Japan remains unchanged. No Kyprolis guidance yet. 2012 non-GAAP expenses increase to $305 to $320 million for R&D. SG&A expense increased to $210 to $220 million. Expects a non-GAAP net loss in 2012 as Kyprolis revenue will be exceeded by expenses. Some Kyprolis sales will appear as deferred revenue.

Conference Highlights:

Kyprolis was approved for sale in the U.S. by the FDA on July 20, 2012. Two Phase III trials, ASPIRE and FOCUS, are ongoing. Started ENDEAVOR Phase III study head to head to Velcade. Early in Kyprolis launch, but it is going well. Has received first confirmation of insurance coverage. Expects first commercial patients in the next few weeks. A miscellaneous J-code will be used until the Social Security administration issues a specific code in January.

Non-GAAP numbers: net income negative $43.6 million, nearly flat sequentially from negative $43.5 million, but down from $27.2 million year-earlier. EPS negative $0.68 vs. negative $0.43 year-earlier.

Nexavar (sorafenib) for liver cancer and kidney cancer global sales, excluding Japan, by partner Bayer were $214.5 million up sequentially from $210 million, and up from $206.6 million year-earlier. The lower Euro impacted revenue. $65 million U.S. sales, up 14% y/y.

Cash and equivalence balance ended at $593.8 million, down sequentially from $622.4 million, due to investments in Kyprolis.

Nexavar Phase 3 data for lung cancer and thyroid cancer results should be available in Q4 this year. In advanced breast cancer trial enrollment should complete in the first half of 2013.

Regorafenib has been submitted to the FDA by Bayer, and would generate royalties for Onyx if approved and commercialized.

Oprozomib, an oral therapy for multiple myeloma, is in a Phase 1b/2 trial with data possible by the end of 2012.

Full Phase 2 Kyprolis data was recently published in Blood.

See also Onyx Pharmaceuticals clinical pipeline.

Operating expenses of $178.5 million included: $76.4 million for research and development; $48.9 million selling, general and administrative; $53.2 million contingent consideration. Interest and other net expense was $0.3 million. No income taxes.


Commercial strategy, pricing versus Velcade? We took into account feedback from doctors. Our patients have already been exposed to Velcade and have already progressed. We have a financial support program to help cover all patients.

We are distributing through a small network of specialty distributors. Early 3rd party data is not likely to be reliable.

ASPIRE? We had global regulatory input, and they are aware we could file with interim data. Enrollment is done, interim analysis in first half of 2013.

Any details of shipments of Kyprolis so far? All the specialty distributors have supply and have received orders from clinics and hospitals. It is available for patients.

Oprozomib? It is progressing well, we have a formulation we like. We have seen some initial clinical responses, but it is too early to provide details.

Cost of goods in the longer term should be consistent with other small molecules, but at first we will be using inventory that was expensed as R&D, which will distort margins.

R&D investment in Nexavar will be decreasing going into 2013. Kyprolis R&D investment will continue.

Cross selling by sales force? We are using two separate oncology sales teams. We just hired about 100 people to sell Kyprolis.

Strength in China reported by Bayer? China had strong sales, despire a lack of reimbursement, up 31% y/y, and in Asia Pacific in general was strong. Taiwan just began reimbursement. 70% of sales are now outside the U.S.

2013 SG&A expense? We are not providing guidance, but Q4 2012 costs should be a basis for 2013, as our Kyprolis costs should be in place.

Kyprolis safety profile? We will continue to work with the FDA to confirm the safety profile of Kyprolis.

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Copyright 2012 William P. Meyers