Onyx Pharmaceuticals Inc.
(
ONXX
) reported a loss of 89 cents per share in the third quarter of
2012, narrower than the Zacks Consensus Estimate of a loss of
$1.08 but wider than the year-ago loss of 44 cents per share.
Despite higher revenues, increased operating expenses led to the
wider year-over-year loss.
Quarterly revenues climbed 19.3% to $89.5 million, well above
the Zacks Consensus Estimate of $81 million.
Quarterly Details
Onyx Pharma's revenues include royalties received under its
collaboration with
Bayer
(
BAYRY
) for the development and marketing of Nexavar, Kyprolis sales
and royalties on Stivarga (regorafenib).
Global Nexavar sales (excluding Japan), recorded by Bayer,
amounted to $208.2 million in the reported quarter, down 0.2%. US
net sales were $67 million, up 7% from the year-ago period. Price
increases and increased use in liver cancer helped drive sales.
Ex-US sales of Nexavar (excluding Japan) were $141 million. Sales
growth in Asia-Pacific and Latin America was offset by weakness
in Europe.
Onyx Pharma and Bayer are looking to expand the drug's label
to boost sales. Late-stage trials with Nexavar are ongoing for
breast (RESILIENCE study) and thyroid cancer (DECISION study with
results due by year end).
Kyprolis, which gained FDA approval in July 2012, became
available for ordering from wholesalers on July 27. Kyprolis is
off to a strong start with sales coming in at $18.6 million in
the launch quarter. The company has a 100-person
multidisciplinary field team. Onyx Pharma said that initial
feedback from healthcare practitioners is encouraging. A
miscellaneous J-code will be used for Kyprolis until it receives
a specific Medicare J code, potentially in January 2014. The
company said that by the end of September, about 50% of the 2,000
targeted accounts have already placed orders for Kyprolis.
Stivarga royalty revenue came in at $0.1 million in the third
quarter of 2012. The oncology product, on which Onyx Pharma
receives a 20% royalty from Bayer, gained FDA approval on
September 27, 2012 for use in treatment-experienced metastatic
colorectal cancer patients.
Quarterly research and development (R&D) expenses went up
46.4% to $85.7 million, primarily due to increased investment on
the development, manufacturing and launch of Kyprolis. Kyprolis
is currently in three phase III studies with a fourth study
scheduled to commence in 2013.
Selling, general and administrative (SG&A) expenses
climbed 44.8% to $61.7 million due to investment in commercial
infrastructure and launch activities for Kyprolis.
Guidance Maintained
Onyx Pharma maintained its guidance for 2012. It expects
R&D expenses (excluding stock-based compensation expense) in
the range of $305 million to $320 million. SG&A expenses
(excluding stock-based compensation expense) are expected in the
range of $210 million - $220 million.
Our View
Onyx Pharma's third quarter results were better-than-expected
mainly due to higher contribution from Kyprolis, which is off to
a strong start. Onyx Pharma has successfully transformed itself
from a one-product company to a three-product company. Kyprolis
represents significant commercial potential and its approval
should remove concerns regarding Onyx Pharma's dependence on a
single product for growth. We expect investor focus to remain on
Kyprolis and Stivarga's commercialization and pipeline
updates.
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