Analyst Conference Call Summary

biotechnology

conference date: February 21, 2013 @ 2:00 PM Pacific Time
for quarter ending: December 31, 2012 (Q4, fourth quarter 2012)

Forward-looking statements

Overview: Saw significant revenue from new drugs and royalties, but still in the red. Guided to continued revenue ramp.

Basic data (GAAP) :

Revenues were $127.9 million, up 43% sequentially from $89.5 million, but down 46% from $237.0 year-earlier (which included a $160 million lump payment).

Net income was negative $42.9 million, down sequentially from $17.4 million, and well down fom $216.7 million year-earlier.

EPS (earnings per share) were negative $0.64, down sequentially from $0.25 and down from $3.16 year-earlier.

Guidance:

For full year 2013, Nexavar global sales by Bayer excluding Japan expected between $890 and $920 million. Expects a non-GAAP net loss for the year. Too early to provide sales guidance for Kypolis and Stivarga. High R&D expense is from Kyprolis comparison trials.

Conference Highlights:

Loss resulted from higher R&D expenses and costs of the Kyprolis commercial launch.

Kyprolis revenue for treating multiple myeloma was $45.3 million, up sequentially from $18.6 million, and up from zero year-earlier. There was $10 million deferred revenue at the end of the quarter. Continuing to invest in Phase III program to expand the label. We expect quarter on quarter demand growth through 2013. Already has 30% of the market for the current label in the U.S.

Nexavar (sorafenib) for liver cancer and kidney cancer revenues from partner Bayer were $72.9 million, down 5% from $76.8 million year-earlier. Filing to treat thyroid cancer. Breast cancer data later this year.

Royalty revenue from Bayer for Stivarga for metastatic colorectal cancer was $8.3 million, up sequentially from $0.1 million. Expects European and Japanese regulatory approvals this year. Expects continued growth to annual peak sales of $1 billion, on which Onyx would receive $200 million in royalties.

Non-GAAP numbers: net income negative $24.0 million, up sequentially from negative $51.8 million.

Cash and investments balance $493 million. Raised an additional $352 million in January with a public stock offering.

See also Onyx Pharmaceuticals clinical pipeline.

Cost of goods sold was $0.8 million. Research and development expense was $82.6 million. Sales, general and administrative expense $74.6 million. Contingent expense $3.0 million. Intangibles amortization $5.2 million. Total operating expense $166.1 million. Income from operations negative $38.2 million. Other expense $5.7 million. Income tax benefit 1 million.

Q&A:

Pomalidomide as competition? Kyprolis is already established as 3rd or 4th line multiple myeloma treatment. The approval of another agent is good for patients. 70% of doctors indicate they want to increase use of Kyprolis.

Combination use of Revlimid and Velcade early in therapy now that more agents are available? We are seeing a trend towards the combination in first-line.

Kyprolis maintenance study data will be updated at IMW. Some early data for oprozomib should also be released.

For 2013, Kyprolis multiple myeloma trials should be at their highest level of spend.

Cardiovascular side effects seem to be in line with the results of the trial and do not seem to be affecting the ram for Kyprolis. Also Kyprolis does not appear to be a problem for renally impacted patients. So far twice-weekly dosing does not seem to be a problem.

Any one-time revenue for Stivarga in Q4? There was a backlog of patients who had no other options left available when the therapy was introduced.

We are still open to acquisitions as we do not have an internal discovery program.

Kyprolis FOCUS data release this year is interim data. It is possible the data will be good enough to stop the trial at the interim.

It is too early to make duration of therapy announcements for Kyprolis.

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