conference date: February 23, 2010 @ 2:00 PM Pacific Time
for quarter ending: December 31, 2009 (fourth quarter 2009)
Overview: Revenues and profits down on Proteolix transaction expenses.
Basic data (GAAP) :
Revenues from joint unconsolidated venture with Bayer were $67.3 million, down 3% sequentially from $69.1 million but up 35% from $49.7 million year-earlier.
Net income was negative $5.5 million, down sequentially from positive $8.2 million but up from negative $$30.2 million in the year-earlier quarter.
EPS (earnings per share) were negative $0.09, down sequentially from positive $0.14 but up from negative $0.53 year-earlier.
Global Nexavar net sales of $1 billion in full 2010. Margins expected to improve to 60% or better. R&D expense up $35 to $50 million over 2009. 2010 SG&A to grow 5% to 10%. Net interest expense of $15 million (includes convertible debt). $25 to $30 million non-cash stock based compenation expense. Believes will continue to be non-GAAP profitable in 2010, with strong cash flows.
Global sales of Nexavar for liver and kidney cancer by Bayer were $235.2 million, up 33% from $176.5 million year-earlier. Believes Onyx is in a great position to become a major pharmaceutical company as it develops and then commercializes its pipeline.
Non-Gaap Net income of $8.76 million, down slightly from $8.9 million year-earlier. Excludes $6.1 million in stock based compensation expense, $2.1 million imputed interest on convertible notes, $4.5 million Proteolix transactions cost, and $1.5 million contingent consideration related to Proteolix. Non-GAAP EPS $0.14.
Cash and investments balance ended at $587.3 million.
Operating expenses of $69.8 million consisted of $36.0 million for R&D, $32.2 million for selling, general, and administrative, and the $1.5 million contingent Proteolix consideration. Loss from opeations was $1.5 million. Other income was negative $3.7 million, mostly due to convertible debt. Income taxes $0.4 million.
59% commercial margin in 2009, up from 53% in 2008.
Nexavar for liver cancer continues to expand internationally, and it is a well established therapy for kidney cancer. Expects to expand Nexavar use in Europe and regions near Europe. China's high rate of liver cancer is causing growth despite still being in the reimbursement review process (but process could last into 2011). South Korea has as many liver cancer cases as the U.S., and is in the reimbursement approval process. Japan results were lower than expectations.
Proteolix acquisition gives us worldwide rights to several important assets, including carfilzomib for multiple myeloma. Phase III combination study for relapsed MM will begin in 2010.
Kidney cancer therapy market is expected to become increasingly competitive.
Nexavar trends? Y/Y we saw 24% annual growth, with every region showing demand growth. Trend is Q3 seasonally up, Q4 seasonally down sequentially. Expect growth from every region in 2010, with liver cancer being the driver and Asia being the growth region.
What drives the margin improvements? We worked with Bayer to improve margins over the last 2 years by managing expenses. It has mainly come from managing global SG&A.
Higher than expected SG&A in Q4? That is seasonally up every Q4. Y/Y margins improved. The acquisition gave us more employees, so more stock-based compensation, and higher SG&A in our guidance for 2010.
Country level sales will be reported by Bayer in a few days.
Cost of Goods sold bump in Q4? That is not going to be the run rate for 2010.
Increased 2010 R&D spend? Reflects investment across entire portfolio: Nexavar and Proteolix pipeline.
The Chinese process for targetted biologics is still unfolding. In the meantime the drug is on the marketplace on a private pay basis. In Taiwan approval should be in Q2 and then reimbursement within another year.
The carfilzomib plus Revlimid multiple myeloma study is being done in partnership with Celgene (CELG).
Nexavar lung cancer data timeline? Event driven analysis does not give us an exact read-out time, but it should be midyear.
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