Onyx Pharmaceuticals Inc.
) reported second quarter 2012 loss per share of 85 cents, wider
than the Zacks Consensus Estimate of a loss of 81 cents and the
year-ago loss of 56 cents per share. Despite higher revenues,
increased operating expenses led to the wider loss.
Quarterly revenues climbed 7% to $72.7 million, just above the
Zacks Consensus Estimate of $72 million.
Onyx Pharma books revenues entirely from royalties received from
its collaboration with
) for the development and marketing of Nexavar. The drug is
currently marketed worldwide as a treatment for unresectable liver
cancer and advanced kidney cancer.
Global Nexavar sales, recorded by Bayer, amounted to $214.5
million in the reported quarter, up 3.8%. Impressive sales in the
US ($65 million), along with increased demand in emerging markets,
especially Latin America and Asia Pacific, led to the upside.
Onyx Pharma and Bayer are looking to expand the drug's label to
boost sales. Late-stage trials with Nexavar are ongoing for lung
and thyroid cancer.
Quarterly research and development (R&D) expenses went up
21.1% to $76.4 million, primarily due to increased investment on
the development, manufacturing and launch of Kyprolis
Selling, general and administrative (SG&A) expenses climbed
28% to $48.9 million due to investment in commercial infrastructure
and pre-launch expenses for Kyprolis.
Onyx Pharma was in the news recently with the US Food and Drug
Administration (FDA) approving the company's multiple myeloma (MM)
candidate, Kyprolis (carfilzomib). Kyprolis has been approved for
use in treatment-experienced MM patients who have received at least
two prior therapies, including
Johnson & Johnson
) Velcade (bortezomib) and an immunomodulatory agent and whose
disease has progressed on or within 60 days of completion of the
last therapy. Onyx has also begun shipments of Kyprolis following
the FDA approval.
Kyprolis is currently in a phase III study (ASPIRE), which is
being conducted to assess the clinical benefit of the candidate
with interim data expected to be out by first half of 2013. The
study is being conducted under the FDA's Special Protocol
Assessment (SPA) program. The FOCUS trial which studies Kyprolis in
relapsed and refractory multiple myeloma is expected to complete
enrollment of patients in the first quarter of 2013. The company
also initiated a head-to-head study (ENDEAVOR) in multiple
We note that Onyx is liable to make an $80 million milestone
payment to former Proteolix Inc. shareholders following the
accelerated approval of Kyprolis in the US. While $63 million will
be paid in the form of Onyx's stock, the balance will be paid in
Meanwhile, Bayer and Onyx Pharma's oncology candidate,
regorafenib, recently received priority review status in the US,
for the treatment of metastatic colorectal cancer (mCRC) in
patients whose disease has progressed despite prior treatment. Onyx
expects a regulatory decision from the FDA and EU in the fourth
quarter 2012 and the first half of 2013 respectively. Bayer also
plans to file submission for an additional indication of
regorafenib in the US in the second half of 2012.
Onyx Pharma is entitled to receive a 20% royalty on any future
worldwide net sales of regorafenib in oncology. Bayer is also
seeking regulatory approval for regorafenib in the EU.
Additionally the company revised its expense guidance for 2012.
It now expects R&D expenses (excluding stock-based
compensation) to be in the range of $305 million to $320 million
instead of $270 million to $290 million. Also the revised SG&A
expenses guidance (excluding stock-based compensation) is expected
to range between $210 million and $220 million instead of $170
million - $180 million.
The speedy approval of Kyprolis is a major positive for Onyx
Pharma. Kyprolis' approval should remove concerns about the
company's dependence on Nexavar for growth. We currently have a
Neutral recommendation on Onyx Pharma. The stock carries a Zacks #3
Rank (Hold rating) in the short run.
BAYER A G -ADR (BAYRY): Free Stock Analysis
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ONYX PHARMA INC (ONXX): Free Stock Analysis
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