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ONYX Pharmaceuticals, Inc. (ONXX)

March 14, 2013 8:30 am ET

Executives

Julianna Wood - Vice President of Public Affairs

N. Anthony Coles - Chairman and Chief Executive Officer

Helen I. Torley - Chief Commercial officer and Executive Vice President

Barbara Klencke

Ola Landgren

Bert O'Neil

Christopher Kirk

Matthew K. Fust - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Marshall Urist - Morgan Stanley, Research Division

Robyn Karnauskas - Deutsche Bank AG, Research Division

Cory William Kasimov - JP Morgan Chase & Co, Research Division

Steven Silver - S&P Equity Research

Howard Liang - Leerink Swann LLC, Research Division

Biren Amin - Jefferies & Company, Inc., Research Division

Ryan Martins - Lazard Capital Markets LLC, Research Division

Michael G. King - JMP Securities LLC, Research Division

Presentation

Julianna Wood

Good morning. It's a pleasure to welcome you here today. I'm Julie Wood, Vice President of Public Affairs. And we really are happy to share this Analyst Day with you. Of course, before we start, I have a couple of announcements. We will be making forward-looking statements today. As you know, forward-looking statements are inherently risky, so we direct you to our filings with the SEC, in particular, our latest 10-K, which not only delineates the business but business risks as well. Second, we will be having a couple of clinical investigators join us for the presentation today. As a reminder, Onyx can only comment as to the FDA-approved indications for Kyprolis and Stivarga. So answers to any questions outside of these indications will be based upon information that has not yet been confirmed by the FDA. It will be the investigator's personal experience and we at Onyx cannot comment on that.

With that, I thank you, again. We're happy to have you here. And I'm going to turn it over to Dr. Tony Coles, our Chairman and CEO.

N. Anthony Coles

Thank you, Julie, and good morning. Thank you for joining us for the 2013 Capital Markets and Analyst Day. We're pleased to be here to share the evolving Onyx story, the transformation of the company that we've been talking about over the last several months and the delivery of proof in so many ways as the story advances. Before I get started with a few brief introductory prepared remarks, I'd like to introduce the members of the executive team who are here with us in New York, joining us for this special occasion. As I call your name, if you'd be -- please stand and give a little bit of the royal wave, that will be terrific. So we'll ask Dr. Helen Torley, our Chief Commercial Officer, who's joining us; Matthew Fust, our Chief financial Officer; Dr. Pablo Cagnoni, his first public appearance as the Onyx Head of R&D. So welcome Pablo. And he has responsibility for all of R&D and technical operations. Dr. Juergen Lasowski, our Head of Corporate Development and Strategy; Suzanne Shema, the General Counsel and the Corporate Secretary.

Also joining us are Dr. Barbara Klencke, known very well to many of you who has filled in admirably as a terrific leader for the clinical organization. Please stand, Barb. Very good, thank you.

Julie Wood, all of you know, and she just introduced our program; and Dr. Christopher Kirk, who is our Vice President of Research. And you'll be hearing more from Chris later in the day.

So the story continues. Several months ago, we talked about the opportunity to transform the company. It was an aspiration. It was a dream at that time and now, we are standing in the reality of the promise that we made to you, having expanded the company. This is a story evolving around the evolution of a pipeline and a portfolio, the delivery of products and most importantly, the delivery of product-driven top line sales growth opportunities, which is the ultimate objective for what we do. At the heart of everything we do and you've heard me say this before, are the patients who we care for and who are counting on us and we rely on them and the opportunities we bring to them to continue to grow this great company.

Our objectives are really quite simple. It's to continue the successful launches of Stivarga and Kyprolis, to expand their indication opportunities, to continue to grow Nexavar, to do all of that in the United States. And for Kyprolis and the proteasome inhibitors franchise, in particular, to begin doing that outside of the United States, which is a key milestone for 2013. So we title this day, the Next Chapter Begins: Breakaway Growth.

For the agenda today, I'm, as I say, going to make a few brief remarks. And then I'll ask Dr. Torley, Helen Torley to join us to update on the performance of the 2 recent launches as a result of the FDA approvals in 2012, for Kyprolis and for Stivarga. Helen will also talk about the growing importance to the indication expanding opportunities for Nexavar and bring together the context that we're operating in. Helen will be followed by Barb Klencke, who will talk about the proteasome inhibitor franchise. We'll provide some important updates in terms of the clinical trials, but most importantly, discuss the front line strategy and study design with you today.

Dr. Ola Landgren, our -- one of our 2 special guests today, a senior investigator at the NIH and the primary investigator on one of the most important front-line studies for Kyprolis, Revlimid and dexamethasone, will be here to share his data with some updates and the importance of the work that he's doing in the newly diagnosed setting. Barb Klencke will join us, again, to talk about the kinase inhibitors and palbociclib, the Pfizer therapy PD-991 that is being advanced in metastatic breast cancer. And then Dr. Bert O'Neil, will discuss Stivarga. Chris Kirk will come and provide some insights into what we're doing on the discovery side of Onyx. And then I'll join you, again, at the end to moderate our Q&A session with the presenters.

So let's talk a little bit about the evolution of the company. We use the word transform frequently but we really do think what has happened is nothing short of spectacular for Onyx. Nexavar, half our product essentially, when joined the company in 2008, shared with Bayer Pharmaceuticals and with growing success around the world, most importantly in the emerging markets and in the United States, where there has been growth. Europe we've been challenged, but that has been offset by growth in these other areas. And in moving the company from its dependence on Nexavar through the evolution of an approval for Kyprolis on an accelerated approval basis and approval for Stivarga, which is the subject of our settlement with Bayer Pharmaceuticals in 2011, with great promise behind those 2 therapies, which is starting well in the marketplace, added by oprozomib, the potential to be one of the first oral proteasome inhibitors and palbociclib which I just mentioned a moment ago. Our objective is clear: become a global oncology leader.

Let's talk a little bit about the evolution for each of these. Nexavar with very important data in thyroid cancer. That will be the subject of a supplemental NDA later this year. For Kyprolis, a broad comprehensive global development plan across multiple lines of therapy, which we see as a means of bringing Kyprolis to more patients, if those studies are successful and, importantly, contributing to the top line sales growth for the company. And in Stivarga, a surprise for everyone, the sales for 2012 and a 20% net sales royalty that Onyx derives on that basis, adding a very nice complement on the cash flow side of our business to offset the investments that we're making in the proteasome inhibitors.

So how will we continue to accelerate this topline growth? Well, 3% to 7% growth for Nexavar in 2013, which, for a brand that is nearly 8 years old, we think is very strong, particularly given what its come to in the emerging markets and in the United States. That growth we expect will be supplemented not only by the additional data in thyroid cancer and indication opportunities but potentially, data from the emerging breast cancer study, the RESILIENCE study, that leverages outstanding Phase II results from a couple of years or so ago for which we expect to announce enrollment completion this year.

Growth in the emerging markets, new indication opportunities and, adding to that, on the kinase inhibitor side of the business, Stivarga, with the opportunity from the 20% royalty stream already approved in the United States in metastatic colorectal cancer, already approved in the United States for GIST and pending regulatory actions in the key markets around the world. We expect those and updates on those in the near-term for both the EU and for Japan and the opportunity for new indications globally as a result of the broad Phase II program for Stivarga, as well, which Dr. O'Neil will discuss with you momentarily.

And then finally, for Kyprolis, our first wholly owned and proprietary therapy. Wonderful for us to have because it gives us the opportunity to enter the markets outside of the United States. The sales performance in the U.S. has gone extremely well. We've disclosed and discussed the sales performance for 2012 since the approval. But importantly, the opportunity for continued quarter-over-quarter growth throughout 2013, which is something that we're quite excited about as physicians continue to indicate a preference and a desire to write even more Kyprolis. The potential, x U.S., we expect is also large. The European demographic support, a size market opportunity similar to the United States. Then outside of Europe and the U.S., we're contemplating the local partnerships that will be required to support global expansion.

And strategically, and we've discussed this as well, the goal is for us on the kinase inhibitor side of our business to decrease the R&D investment, which you can see in the numbers that we reported for Nexavar for 2012. I'll remind you that for Stivarga, we have no R&D development expense responsibilities, Bayer funds those trials solely. And for Nexavar, as the decision in the RESILIENCE studies wind down, you'll note that the cash flow and the contribution margins from Nexavar will continue to increase, which is the way we've designed the business when we decided to invest in the proteasome inhibitors. So as the R&D investment for Nexavar goes down, Stivarga, of course, will only be expense-free royalty income for us with the opportunity to expand on the top line through additional indications. And the 2 that are already approved, we expect that the opportunity to offset the R&D investment that we'll be making in the proteasome inhibitor's investment for these proprietary therapies, which we own 100% of around the world, except Japan, gives us an opportunity to provide all of our support behind the most important growth drivers for Onyx.

Kyprolis is a focused study in the relapsed and refractory setting. The ASPIRE study in the relapsed setting. The ENDEAVOR trial, which is the head-to-head comparison of Velcade and oprozomib or Kyprolis in the relapse setting. And today, for the first time, we announced the CLARION trial. The front-line study that will be comparing Velcade and Kyprolis in the front-line setting and we'll discuss the protocol design with you in a moment. CLARION, because it brings clarity. CLARION, because it is a call to action. CLARION, because we expect that this will be a definitive opportunity for Kyprolis in one of the most important patient populations in this dreadly disease.

And then for oprozomib, additional data that we're expecting, Phase Ib/II data, that will be discussed next month at the IMW meeting in Kyoto, Japan, and the continuation of that program once the dose has been identified to myeloma patient studies, specifically.

I've talked about globalizing our business. You'll see in the dark green, Alaska, the continental United States, as the place where we have the proprietary responsibility. Our sales force is there on a daily basis, educating physicians, interacting with office staff and making sure that Kyprolis gets to every eligible patient in this country. In the lighter green, you see the core EU markets, Germany, France, Spain, Italy and the United Kingdom, where we are making plans today to leverage this small core leadership team that we have in Zug, Switzerland, and expand the team at the signs of regulatory progress in that market. Positive data from the FOCUS or the ASPIRE trial, will unlock investment opportunities for us in Europe and those activities will be gated based upon regulatory progress and success.

You'll see Japan there in the orange sliver to your far right. That is what -- the territory that's been licensed to Ono Pharmaceuticals for both Kyprolis and oprozomib. They're advancing Kyprolis through Phase I and doing a very nice job of building a strong presence for this therapy in Japan. And in the rest of the world, in blue, where we have commented that we will, of course, select market opportunities. Notably those markets where there can be a commercialization on the basis of the U.S. approval, we will take local partnerships to provide Kyprolis to patients in these key areas.

So you can see that clearly, germane to the Onyx story, the Onyx evolution, the transformation, are a number of important key clinical milestones: The initiation of the CLARION study; the FOCUS results, which we expect on an interim basis as early as the second half of this year; the ASPIRE results in the fourth quarter or later; completion of the ENDEAVOR trial; and then, for oprozomib, the data that I mentioned, upcoming next month at the IMW group meeting in Japan.

For the kinase inhibitors, the Phase II RESILIENCE enrollment is actually complete. So we are proud to announce today, that the breast cancer program for Nexavar has finished enrollment, the initial target enrollment. And this, we consider a great sign because that means that we have an opportunity to speed the availability of data for the breast cancer program. The sNDA filing for thyroid and for the Stivarga, the regulatory actions I mentioned in the EU and in Japan, and the new Phase III trials, which Dr. O'Neil will discuss when he joins us here at the podium.

So you can see that this is a year that is filled already with important accomplishments. The sales progress that we've talked about for 2012 and a great start to 2013 in terms of sales; the quarter-over-quarter growth that we're projecting for Kyprolis; the performance for Stivarga already in the U.S. with the addition of a second indication and approval in GIST; the filing of the sNDA for thyroid; and very importantly, the completion of the Phase II RESILIENCE breast cancer study, which has just finished its target enrollment.

So how will we continue to build Onyx? It must be a question on everyone's mind. We've got such a great start, a great foundation to expanding the pipeline and portfolio of our business, what will be do for next act beyond Kyprolis, Stivarga, oprozomib and palbociclib? Well, that's quite a portfolio and quite a pipeline in and of itself and there is an opportunity to continue to grow, invest and deliver topline results from this lineup of what we expect to be great therapies that can, indeed, change the face of cancer treatment. But we haven't gotten here without some thought and without some care, both for R&D collaboration such as the one we have with Bayer, the one we had with Pfizer that produced palbociclib, so R&D collaborations remain key and essential to driving the future growth for our business.

But we are evolving and moving into a phase of deals. We've talked quite frequently about the opportunistic approach that we have taken to in-licensing opportunities, option arrangements, product acquisitions, company acquisitions. And it's from this menu of opportunities that we will continue to expand the pipeline for Onyx. We love this approach. It minimizes the amount of risk that we've taken on in the early discovery phases, which is the most riskiest and the most expensive. And we love the notion that it provides an opportunity for us to create value, to diversify our risk, yet continue to deliver benefit to patients and value to shareholders.

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