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Onyx Pharmaceuticals, Inc.

Q4 2008 Earnings Call

February 23, 2009 5:00 pm ET


Dr. N. Anthony Coles - President and Chief Executive Officer

Laura A. Brege - Chief Operating Officer

Matthew K. Fust - Chief Financial Officer

Julianna Wood - Vice President, Investor Relations and Corporate Communications


Jessica Li - Goldman Sachs

James Birchenough - Barclays Capital

Philip Nadeau - Cowen & Company

Howard Liang - Leerink Swann

Jason Zhang - BMO Capital Markets

George Farmer - Canaccord Adams

Cory Kasimov - J.P. Morgan



Good afternoon ladies and gentleman and welcome to the Onyx Pharmaceuticals Financial Results Conference Call. (Operator Instructions). I will now turn the call over to Onyx Pharmaceuticals, Inc.

Julianna Wood

Hello and welcome. I'm Julie Wood, Vice President of Investor Relations and Corporate Communications at Onyx Pharmaceuticals. We thank you for joining us today for our fourth quarter and year end 2008 financial results conference call.

Leading our call today is Onyx’s President and Chief Executive Officer, Dr. Tony Coles. Also providing updates on the teleconference are Laura Brege, our Chief Operating Officer; and Matt Fust, our recently appointed Chief Financial Officer.

Please note that we will be making forward-looking statements during this teleconference that could include financial, clinical, or commercial projections. Statements that are not historical facts are forward-looking. References to what we expect, believe, intend to do, plan, estimate, or other statements referring to future events or results are intended to identify these statements as forward-looking.

Forward-looking statements are inherently subject to risks and uncertainties. For a discussion of these risks and uncertainties, we refer you to our 10-K for the year ended December 31, 2008, which we expect to file with the Securities and Exchange Commission this week.

In addition, we will be presenting and discussing non-GAAP financial measures in this presentation. For reconciliation of these non-GAAP financial measures to the corresponding GAAP measures, please see today's press release which is posted on our website at

I would now like to turn the call over to Tony Coles, who will begin the discussion with an overview of our business. After Tony's remarks, the management team will review commercial, clinical, and financial highlights before opening up the call for questions and answers.

Dr. N. Anthony Coles

Before I begin, I would like to welcome Matt Fust as our new Chief Financial Officer. Matt brings extensive senior management and biotech operating experience to Onyx, and it is a pleasure to have him as a member of the executive team and a participant on today’s call. You will be hearing from that a bit later after Laura talks about some of our commercial successes and opportunities ahead.

Now, let’s turn to 2008, a year of remarkable growth and advancement for Onyx. It was the first full year of Nexavar’s expansion into its second indication of liver cancer. The first year, we expanded the pipeline by adding not just one but potentially three new compounds to the company’s portfolio and very importantly, it was the first fully year of positive cash flow and profitability for our business, an accomplishment that was made possible by increasing brand margins for Nexavar. While any one of these achievements would be a milestone in and of itself, the fact that these signature accomplishments occurred in the same year suggests that our business is transforming in the most important of ways and that we have achieved what few other biotech companies have, product sales driven earnings. With our financial profile and cash balance, we believe we are well positioned to weather the current economic turbulence, and we expect additional progress for the business in 2009. We recognize that Nexavar with its free cash flow is the engine for continued growth of our business, and we are committed to investing in and wisely growing this important asset.

In 2008, we made significant progress on all four of our corporate priorities. These include, first and foremost, managing Nexavar as a business where strong Nexavar sales growth of 82% and improved operating margins compared to the prior year, drove Onyx to profitability in 2008; second, maximizing our commercial business; third, investing in the development of Nexavar; and fourth, building a product portfolio beyond Nexavar. As Nexavar increase its penetration in liver cancer, it is creating a new standard of care across the globe for this very-difficult-to-treat tumor. At the same time, Nexavar maintained its presence as an important therapy for kidney cancer and together these two markets have established Nexavar as a significant player in the field of targeted therapies, and yet with all of this successful performance, it remains important for us to think ahead.

Beyond Nexavar, Onyx expanded its portfolio to encompass some promising new targets. We selected these novel agents based on their unique characteristics as well as their potential commercial opportunities. With deal structures that allow for staged investments as risk reduction and value creation occur, we have started to build a portfolio outside of Nexavar in a clear but measured way, and with our experience in driving development and commercialization efforts while managing cash reserves, we believe we are in an excellent position to grow the value of these assets as they advance into and through the clinic.

Looking ahead, we believe that the tumultuous market conditions continue to favor companies like Onyx with a healthy cash balance, a strong financial profile, and a cash-generating product. Mindful of this, we will continue to actively evaluate opportunities and expect to remain as selective in the types of compounds we asses as we are diligent in the kinds of deals we execute.

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