Analyst Conference Call Summary


Onyx Pharmaceuticals

conference date: August 8, 2013 @ 2:00 PM Pacific Time
for quarter ending: June 30, 2013 (Q2, second quarter 2013)

Forward-looking statements

Overview: Continuing to ramp product revenue, continuing to lose money.

Basic data (GAAP) :

Revenue was $153.0 million, up 5% sequentially from $145.5 million, and up 110% from $72.7 million in the year-earlier quarter.

Net income was negative $53.2 million, down sequentially from negative $33.7 million, but improved from negative $106.49 million year-earlier.

EPS (earnings per share) were negative $0.73, down sequentially from negative $0.47, but up from negative $1.65 year-earlier.


2013 guidance remained unchanged, estimating global sales of Nexavar by Bayer at $890 to $920 million and a commercial margin of 62% to 64%. Onyx R&D expense $400 to $450 million and SG&A expense of $290 to $320 million. Non-GAAP net income will be negative.

Conference Highlights:

Hopes the two Phase 3 studies for Kyprolis will lead to a label expansion across all lines of multiple myeloma therapy, as well as international expansion. Believe can file in Europe in the second half of 2014 after results in the first half of 2013.

Sequential revenue increase was mainly from Nexavar, with y/y increase mainly from Kyprolis.

Recapped the process for the potential sale of Onyx Pharmaceuticals. Multiple parties have been given information under nondisclosure agreements that is not available to the public. The board will consider its options if there are any bids. "We will not provide any additional information ... today."

R&D expense increased significantly mainly for Kyprolis Phase 3 trials. Selling, general and administrative expense also increased related to hiring sales people for the launch of Kyprolis. But margins still expanded.

Non-GAAP numbers: net income negative $29.0 million, down sequentially from negative $13.7 million, but improved from negative $43.6 million year-earlier. EPS negative $0.40, improved sequentially from negative $0.47 and improved from negative $0.68 year-earlier.

Kyprolis revenue for treating third-line multiple myeloma was $61.0 million, down sequentially from $64.0 million. There was also $10 million of deferred revenue for shipments to distributors. Kyprolis is extending is market share within its label. Projects continued q/q demand growth in 2013 in the U.S. Preparing for launch in Europe if approved. Also in trials to compare to Velcade. Other trials are being conducted by independent investigators.

Nexavar (sorafenib) for liver cancer and kidney cancer revenues from partner Bayer were $81.8 million, up 16% sequentially from $70.3 million. $230 million global (excluding Japan) sales by Bayer. Demand grew in all regions, and there was inventory replenishment in the U.S.

Royalty revenue from Bayer for Stivarga for metastatic colorectal cancer (3rd line) and GIST was $10.2 million, up sequentially from $9.2 million. Stivarga is now approved in several countries outside the U.S. and Bayer continues to pursue global registrations.

Cash and investments balance ended at $755.9 million, down sequentially from $738.9 million.

See also Onyx Pharmaceuticals clinical pipeline.

Cost of goods sold was $2.0 million. Research and development expense was $$102.8 million. Sales, general and administrative expense $87.5 million. Contingent expense $3.0 million. Intangibles amortization $5.2 million. Total operating expense $200.6 million. Income from operations negative $47.5 million. Other expense $5.8 million. Income tax $0.0 million.

Two new clinical trials (Phase 1b/2 and 1) of oprozomib, an oral proteasome inhibitor, were initiated: with Dexamethasone for relapsed/refractory myeloma, and with Revlimid and dexamethasone for newly diagnosed myeloma.

The results of the Phase 3 trial for Nexavar for radioiodine-refractory differentiated thyroid cancer were presented at ASCO in June, showing safety and a 5 month improvement in progression free survival. Estimated 3000 to 4000 annual patients in U.S. and Europe. Filed with FDA and EMA for approval.


FOCUS interim analysis, futility, color? There was no futility analysis. The commitee only advised the study could continue.

How high was the hurdle for the interim? We don't comment on design of ongoing trials.

Pomalyst launch impact on Kyprolis? We are not indicated in the front line setting, and did not see any front line use. We met our expectation in the second quarter.

Champion dose escalation Kyprolis trial? Dose escalation, weekly dose. We will present an update at ASH later this year.

R&D run rate going forward? Reaffirmed full year R&D guidance. Q2 rate will probably tick up just a little bit in the second half of the year.

European infrastructure build? Continuing to build a small core team. Will be ready for the earliest possible launch.

Nexaver STORM trial final results in second half of next year. Breast-cancer results should be available second half of 2014.

Competition for Kyprolis launch? Before Kyprolis when patients had progressed with Revlimid and Velcade they got retreatment with the same. Both Kyprolis and Pomalyst are being used instead of retreatment. Significant opportunities remain.

Oprozomib next update? Studies are just getting up and running, but will be updated at ASH. Feedback is patients are able to stay on therapy longer. The combination trials are not likely to have data ready by ASH.

Post market approval vigilance of Kyprolis? We are seeing no safety or efficacy concerns.

Duration of therapy for Kyprolis? Tends to be in the four to five month time frame, but these earliest patients had been heavily treated with previous lines of therapy. Newer patients have less prior therapy, but we have not had time yet to determine how long their duration is.

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Copyright 2013 William P. Meyers