Analyst Conference Call Summary

conference date: February 23, 2011 @ 2:00 PM Pacific Time
for quarter ending: December 31, 2010 (fourth quarter 2010)

Forward-looking statements

Overview: Record Nexavar sales in the quarter, but expanded operating expenses still led to substantial losses. Sequential decline due to the Carfilzomib upfront payment in Q3.

Basic data (GAAP) :

Revenues were $70.0 million, down 43% sequentially from $122.9 million, but up 2.5% from $68.3 million year-earlier).

Net income was negative $17.1 million, down sequentially from $41.5 million, and also down from negative $5.5 million year-earlier.

EPS (earnings per share) were negative $0.27, down sequentially from $0.66, and also down from negative $0.09 year-earlier.

Comparisons: ONXX Q3 2010; ONXX Q4 2009

Guidance:

Non-GAAP profitability for full 2011 and cash flow positive; includes one or more partnering transactions. Nexavar global sales of $975 million to $1.025 billion, with double-digit growth in Asia offset by competition in kidney cancer market. R&D expense $225 to $250 million, weighted towards second half. $35 million non-cash stock based compensation expense.

Conference Highlights:

Revenues down sequentially because of the carfilzomib payment from Ono in Q3. Record Nexavar sales by Bayer. "We start 2011 well positioned to drive our Nexavar and proteasome inhibitor franchises forward." Energized by progress made in 2010.

Nexavar (sorafenib) for liver cancer and kidney cancer global sales by partner Bayer were $257 million, up 9% y/y, resulting in $70 million in revenue to Onyx. Continuing efforts to expand sales in emerging markets and earlier in the progress of liver cancer. Trials for breast, thyroid, and lung cancer are also underway.

Non-GAAP net income was negative $17.4 million or $0.28 per share, compared to positive $8.8 million year-earlier. Excludes some Proteolix acquisition expense and stock-based compensation.

The NDA for carfilzomib for multiple myeloma should be filed mid-year. ONX 0912 is expected to start Phase 2 trials this year. See also Onyx Pharmaceuticals clinical pipeline.

Cash and equivalents balance ended at $577.9 million, plus $31.9 million restricted cash.

Will invest in carfilzomib to support its potential. One of the most active agents ever discovered for multiple myeloma.

Operating expenses of $83.0 million included $54.3 million for R&D, $36.9 million for selling, general and administrative, and benefited from an $8.2 million contingent consideration. Income from operations was negative $13.1 million, other expense $4.2 million. There was a $0.16 million income tax benefit. Stock based compensation included was $5.5 million. Q4 expenses for Nexavar are typically seasonally high.

Q&A:

Carfilzomib on track? Yes. As early as the middle of this year. Silence means we are on plan.

Nexavar growth? Sales are increasingly to liver cancer, now 70%, and the greatest growth opportunity.

Strategy for front line carfilzomib? One benefit of waiting to file until this year is that we have the great front line data for complete response. We are looking at a life cycle management program for carfilzomib, and that could include head-to-head studies.

Partnering strategy? We are careful about how we put deals together. We have a variety of assets to work with. The interest around carfilzomib has attracted a lot of attention. We could also monetize earlier stage assets.

2011 R&D expense? It is about accelerated investment in proteasome inhibitor program, and particularly carfilzomib. We also need to ramp up carfilzomib production prior to approval, which falls under R&D expense under the rules. The guidance includes non-cash stock based compensation component.

Is ONX 0912 more potent than carfilzomib? Potency is similar, but since 0912 is oral, there is an absorption issue. Oral use could be better for long term therapy and in solid tumors.

We missed our 2010 margin guidance largely because of foreign exchange rate issues that lowered revenues.

We took a 9% price increase in the U.S. in January.

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