conference date: February 23, 2009 @ 2:00 PM Pacific Time
for quarter ending: December 31, 2008 (4th quarter 2008)
Overview: Nexavar revenues continued to climb rapidly, but increased R&D costs took the profit out of the quarter.
Basic data (GAAP) :
Revenues from joint unconsolidated venture with Bayer were $49.6 million, up 24% sequentially from $39.9 million, and up 90% from $26.1 million year-earlier.
Net income was negative $30.2 million, compared to positive $12.2 million in Q3 and negative $11.7 million year-earlier.
EPS (earnings per share) were negative $0.53, worse than positive $0.21 in Q3 and negative $0.21 year-earlier.
Full 2009 global Nexavar sales (by Bayer) of $850 to $875 million. Expects to be profitable for the year, but will continue to make investments to maximize potential business. Total operating expenses to be up 5% from 4th quarter if the one-time research charges of $34 million are excluded.
Believes Nexavar sales growth will continue and that the development program has "near-term value drivers." 2008 was a year of remarkable growth for Onyx, the first full-year of positive cash flow and profitability. Building a pipeline beyond Nexavar as well. Believes by 2010 Nexavar worldwide sales could reach $1 billion annually.
Matthew K. Fust welcomed as new Chief Financial officer.
Bayer recorded $176.5 million Nexavar revenue, up 41% from $124.9 million year-earlier. Revenue subject to profit sharing was $160.9 million. Costs were $76.6 million. Combined profit was $84.3 million. Onyx's share was $42.1 million plus $6.4 expense reimbursement and $1.1 million royalty revenue.
Of Bayer total Nevavar sales, $52 million was U.S., up 8% sequentially. Because of the way liver cancer is treated, a specialized marketing team was deployed in 2008. In Europe the broader market is still largely untapped. China uptake is increasing since approval in July. Korea gave marketing approval and reimbursement approval should come soon. Japan approval should come in first half of 2009.
In kidney cancer data continues to drive adoption, with adjuvant studies underway.
Continues to study new indications for Nexavar: non-small cell lung cancer and metastatic melanoma. Both Phase III trials have completed enrollment. Breast cancer is being studied in two Phase II trials. Plans a Phase III trial in thyroid cancer and a Phase II trial in colorectal cancer.
Cash and equivalents ended at $458.0 million, down due to development payments to S*BIO and BTG (Onyx 0801) of about $34 million. These payments also were included in the R&D expense line.
Operating expenses of $81.9 million included $59.9 million for R&D and $22 million for selling, general and administrative. Loss from operations was $32.3 million. Investment income was $2.0 million. Tax benefit $77,000. This included $5.0 million stock-based compensation charges.
2009 Nexavar sales guidance, effects of currency rates? There is too much uncertainty in the Euro to be specific about that. Exchange rates do affect our numbers.
Economic effects of liver cancer rollout? Because of the enormous need that is served, the pricing has been very good world wide, reflecting the value of the drug to patients.
Keep in mind that now that we are investing in therapy development besides Nexavar, the accounting for SG&A and R&D changes.
Shared SG&A growth rate reasonable projection? There will be a modest increase in all the corporate expenses. We are spending money in Asia as we wait for approval or reimbursement. So our modest increased spend for the total business should give a good return. Shared SG&A should not go up much more than the 5% overall SG&A.
Novartis RAD001 (everolimus) [?afinator] therapy for renal (kidney) cancer to launch this year, competitive effects? Patients in trials were 2nd or 3rd line; RAD001 will hopefully provide benefits for them, but Nexavar is a first-line drug. Patients are now living longer, with 16 months the new mean. So multiple agents are becoming more meaningful.
U.S. RCC (renal cancer) vs. HCC (liver cancer) sales? HCC is the growth engine right now. Same in Europe and worldwide.
Are you looking to license more compounds? We are very happy with what we acquired. Nevertheless, if there is a great asset out there, we will look at it. There are high quality assets out there belonging to companies that are running out of cash.
Japan royalties were $2.8 million for full year.
Breast cancer Phase II trials? Were 5 trials, 4 are enrolling. 5th trial will be company-sponsored. 2 trials have enrollment completed. We are just looking for a signal that demonstrates extended survival. We would build are plans on that.
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