conference date: May 6, 2008 @ 2:00 PM PT Pacific Time
for quarter ending: March 31, 2008 (1st quarter 2008)
Overview: Showed net income for the first time.
Basic data (GAAP) :
No revenues - deal with Bayer puts Nexavar revenues in operating expenses (see below).
Net income was $15.4 million, reversing a loss of $11.7 million in Q4 and a loss of $12.2 million year-earlier.
EPS (earnings per share) were $0.27, after of loss of $0.21 in Q4 and a loss of $0.26 year-earlier.
Not revising expense guidance for year. Expecting $600 to $650 million joint sales in full 2008. May need to increase this estimate as new markets come online. Expect profitability as a business with Bayer, and Onyx may be profitable for the full year.
Along with Bayer will manage Nexavar to be a profitable business. Spending will be prudent.
Bayer's sales of Nexavar were $151.9 million, up 149% from year-earlier. The drug for liver cancer and advanced kidney cancer continues to be introduced in new nations. The clinical program to find benefits for other tumor types continues.
Net revenue from the Bayer business was $37.7 million, up from only $3 million year-earlier. Research and development expense by Onyx outside that partnership was $7.4 million. Selling, general and administrative expense was $19.8 million. Income from operations was $10.5 million. Investment income was $5.2 million. Tax provision was $0.3 million.
Cash and equivalents ended at $456.6 million, down $13.1 million from the end of Q4.
There was a total of $3 million in stock compensation expense.
Kidney cancer market is competitive and new therapies can be expected as well. We will fortify our position in this segment. Liver cancer has the potential for growth. Will continue to invest in new applications for Nexavar. Also expect to expand drug portfolio so we are not a one-drug business.
$101 million sales were outside the U.S., $51 million in U.S. Sequentially 23% international and 19% U.S. sales increases. Europe had notable uptake of Nexavar for liver cancer. Italian launch will be in next few months. Liver cancer market is very large in Asia and sales will begin later this year.
Liver cancer is rapidly growing in the U.S. partly due to Hepatitis C infections.
Most launches worldwide have now occured for kidney cancer. Japan launch may result in revenues in Q2.
We have a diverse clinical program that includes over 200 company-sponsored and independent trials, both as a single drug and in combination with other drugs. We are expanding the variety of Phase II trials to screen cancers that respond and can be advanced to Phase III. Breast cancers are one set of targets.
First quarter has traditionally been the lightest for expenses.
We have signicant NOLs (net operating losses), which reduce our tax rate.
Renal cell vs. liver cancer sales in U.S.? Those data are difficult to access. Market share has stabilized for kidney cancer.
Low end of guidance is flat with Q1? We had a significant ($5 million) clinical order in Q1, if you back that out the range we provide shows good growth.
Analysts really did not like the guidance, which implies a slowdown of revenue growth. Response was to say to look at top end of guidance, not bottom end, and to emphasize still enthusiastic about opportunities. This is the first time we are providing guidance and we wanted to set appropriate expectations.
Expenses are likely to be higher than Q1 for rest of year as we look for new targets for Nexavar.
U.S. liver cancer sales leveling off? We believe there is still strong opportunity for liver cancer in U.S. There is significant unmet need.
Where did the cash go? We reclassed some securities into long-term and marked down by $1.7 million, increase in receivable from Bayer, reduced amount of advance from Bayer by $9 million.
Breast cancer results timeline? 5 randomized Phase II studies are just getting underway.
HCC (liver cancer) grew fast in Q4 because we already had contacts with oncologists. But we are expanding efforts to other physician types who treat HCC.
Price increase? U.S. price was raised 5%.
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