Onyx Tops Expectations - Analyst Blog

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Onyx Pharmaceuticals Inc. ( ONXX ) reported a loss of 49 cents per share in the fourth quarter of 2012, well below the Zacks Consensus Estimate of a loss of 84 cents. The company had, however, reported a profit of $1.44 per share in the year-ago quarter.

Quarterly revenues were $127.9 million, well above the Zacks Consensus Estimate of $108 million. Revenues, however, declined from the year-ago revenues of $237 million. Year-ago revenues included $160 million received on the sale of the Japan royalty rights of Nexavar.

For the full year 2012, Onyx Pharma reported a loss of $3.04 per share, compared to the year-ago earnings of 24 cents per share. Revenues were $362.2 million in 2012 compared to $447.2 million in 2011. The Zacks Consensus Estimate for 2012 was a loss of $3.40 per share and revenues of $343 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 $229.1 million in the reported quarter, down 1%. 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 cancer (RESILIENCE study results due in the first half of 2013). The company also intends to file for Nexavar's approval for thyroid cancer this year.

Kyprolis, which gained FDA approval in July 2012, became available for ordering from wholesalers on Jul 27. Kyprolis is off to a strong start with sales coming in at $45.3 million in the December quarter, significantly above $18.6 million reported in the launch quarter.

Stivarga royalty revenue came in at $8.2 million in the fourth quarter of 2012. The oncology product, on which Onyx Pharma receives a 20% royalty from Bayer, gained FDA approval in Sep 2012 for use in treatment-experienced metastatic colorectal cancer patients.

Quarterly research and development (R&D) expenses declined 2.7% to $80.3 million. Selling, general and administrative (SG&A) expenses climbed 35.7% to $68 million due to investment in commercial infrastructure and launch activities for Kyprolis.

2013 Guidance

Onyx Pharma expects Nexavar net sales (excluding Japan) in the range of $890 million - $920 million. Price increases and increased use in liver cancer should help drive sales. Onyx Pharma did not provide guidance for Kyprolis or Stivarga as both products are still in the early stages of commercialization.

The company expects R&D expenses (excluding stock-based compensation expense) in the range of $400 million to $450 million. Expense will be driven by the additional studies being conducted with Kyprolis. SG&A expenses (excluding stock-based compensation expense) are expected in the range of $290 million - $320 million. Onyx Pharma expects to report a loss in 2013.

Onyx Pharma currently carries a Zacks Rank #3 (Hold). The company 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.

Currently, companies like United Therapeutics ( UTHR ) and Avanir Pharmaceuticals, Inc. ( AVNR ) look better-positioned. While United Therapeutics is a Zacks Rank #1 (Strong Buy) stock, Avanir is a Zacks Rank #2 (Buy) stock.

AVANIR PHARM (AVNR): Free Stock Analysis Report

BAYER A G -ADR (BAYRY): Free Stock Analysis Report

ONYX PHARMA INC (ONXX): Free Stock Analysis Report

UTD THERAPEUTIC (UTHR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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