Onyx Pharmaceuticals Reports Second Quarter 2010 Financial Results; Nexavar Global Net Sales Increase 17% vs. Prior Year

Published on Wednesday, 04 August 2010 16:14 Written by TradersHuddle Staff

Non-GAAP Net Income of $2.9 Million and EPS of $0.05

EMERYVILLE, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX) today reported its financial results for the second quarter 2010.  Global Nexavar net sales as reported by Onyx's collaborator Bayer HealthCare Pharmaceuticals Inc., or Bayer, were $236.1 million for the second quarter 2010, a 17% increase compared to $201.0 million in the same period in 2009.  Onyx and Bayer are marketing and developing Nexavar ® (sorafenib) tablets, an anticancer therapy currently approved for the treatment of unresectable liver cancer and advanced kidney cancer in over 90 countries worldwide.

Onyx reported non-GAAP net income of $2.9 million, or $0.05 per diluted share, for the second quarter 2010 compared to non-GAAP net income of $15.3 million, or $0.27 per diluted share, for the same period in 2009.  Non-GAAP net income excludes adjustments to contingent consideration expense in connection with our acquisition of Proteolix, Inc., or Proteolix; employee stock-based compensation expense and non-cash imputed interest expense related to the application of Accounting Standards Codification ("ASC") Subtopic 470-20.  Non-GAAP net income for the second quarter 2010 reflected an increase in the commercial profit from the Nexavar collaboration, offset by an increase in research and development expenses primarily due to the development efforts for carfilzomib, and by interest expense on the convertible senior notes issued in August 2009.

On a GAAP basis, Onyx reported a net loss of $97.2 million, or $1.55 per diluted share, for the second quarter 2010 compared to net income of $9.4 million, or $0.16 per diluted share, in the same period in 2009.  The GAAP net loss for the second quarter 2010 includes an increase in the non-cash contingent consideration expense based on recent positive carfilzomib data.  The change is associated with an increased probability of making the earn-out payments related to the Proteolix acquisition.  A description of the non-GAAP calculations and reconciliation to comparable GAAP measures is provided in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Net Income (Loss)."

"With year-over-year Nexavar net sales growth of 17% and healthy quarter-over-quarter growth, our commercially successful business is delivering cash flow and driving the strategic flexibility to maximize our rapidly advancing pipeline," said N. Anthony Coles, M.D., president and chief executive officer of Onyx.  "The strategy to expand our portfolio has proven successful with the recently announced impressive top-line data for carfilzomib.  These exciting data have the potential to transform Onyx into a multi-product revenue-driven company with the opportunity to benefit even greater numbers of patients."

Revenue from Collaboration Agreement

For the second quarter 2010, Onyx reported revenue from its Nexavar collaboration agreement of $68.8 million compared to $60.2 million for the same period in 2009.  The increase in revenue from collaboration agreement between periods resulted from higher global net sales of Nexavar.

Operating Expenses

Onyx recorded research and development expenses of $43.3 million in the second quarter 2010, compared to $28.0 million for the same period in 2009. Higher research and development expenses in the second quarter 2010 were primarily due to planned investments to develop carfilzomib.  Selling, general and administrative expenses were $26.6 million in the second quarter 2010, compared to $23.5 million for the same period in 2009.  Higher selling, general and administrative expenses were primarily due to the timing of shared advertising and promotional costs related to Nexavar incurred by Onyx and due to planned expense increases as a result of the acquisition of Proteolix.

Contingent Consideration Expense

Onyx recorded $92.0 million of non-cash expense in the second quarter 2010 associated with the increase in the fair value of the liability for the potential earn-out payments related to the Proteolix acquisition.  The increase in the fair value of the liability consisted of $88.5 million due to an increase in the probability of success and $3.5 million due to the passage of time.  The increased probability of success reflects positive preliminary results from the 003-A1 trial, a Phase 2b study of carfilzomib, and the PX-171-006 trial, a Phase 1b study of carfilzomib plus lenalidomide and low-dose dexamethasone, both of which were in patients with relapsed and refractory multiple myeloma.

Interest Expense

Interest expense of $4.8 million for the second quarter 2010 primarily relates to the 4.0% convertible senior notes due 2016 issued in August 2009, and includes non-cash imputed interest expense of $2.2 million as a result of the application of ASC Subtopic 470-20.

Cash, Cash Equivalents and Marketable Securities

On June 30, 2010, cash, cash equivalents, and current and non-current marketable securities were $527.0 million, compared to $587.3 million at December 31, 2009.  This excludes restricted cash of $31.6 million and $27.6 million at June 30, 2010 and December 31, 2009, respectively.  The decrease is primarily due to a $40.0 million earn-out payment made to former Proteolix stockholders as a result of the achievement of a development milestone and a $20.0 million pre-payment to S*BIO Pte Ltd for research and development expenses related to ONX 0803 and ONX 0805.

Six-Month Results

Nexavar net sales, as recorded by Bayer, were $450.5 million and $379.1 million for the six months ended June 30, 2010 and 2009, respectively.  Non-GAAP net income for the six months ended June 30, 2010 was $1.4 million, or $0.02 per diluted share, compared to non-GAAP net income of $23.4 million, or $0.41 per diluted share for the same period in 2009. Non-GAAP net income excludes adjustments to contingent consideration expense in connection with our acquisition of Proteolix; employee stock-based compensation expense and non-cash imputed interest expense related to the application of ASC Subtopic 470-20.  A description of the non-GAAP calculations is provided below in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Net Income (Loss)."  For the six months ended June 30, 2010, on a GAAP basis Onyx recorded a net loss of $109.2 million, or $1.75 per diluted share, compared with a net income of $13.4 million, or $0.24 per diluted share, for the same period in 2009.

Management Conference Call Today

Onyx will host a teleconference and webcast to provide a general business overview and discuss financial results.  The event will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) on August 4, 2010.  The live webcast will be available at: http://www.onyx-pharm.com/view.cfm/32/Event-Calendar or by dialing 847-619-6547 and using the passcode 27437891.  A replay of the presentation will be available on the Onyx website or by dialing 630-652-3044 and using the passcode 27437891# approximately one hour after the teleconference concludes.  The replay will be available through August 18, 2010.

About Onyx Pharmaceuticals, Inc.

Onyx Pharmaceuticals, Inc. is a biopharmaceutical company committed to improving the lives of people with cancer.  The company, in collaboration with Bayer HealthCare Pharmaceuticals Inc., is developing and marketing Nexavar® (sorafenib) tablets, a small molecule drug that is currently approved for the treatment of liver cancer and advanced kidney cancer.  Additionally, Nexavar is being investigated in several ongoing trials in a variety of tumor types.  Beyond Nexavar, Onyx has established a development pipeline of anticancer compounds at various stages of clinical testing, including carfilzomib, a next-generation proteasome inhibitor, that is currently being evaluated in multiple clinical trials for the treatment of patients with relapsed or relapsed/refractory multiple myeloma and solid tumors.  ONX 0801, an alpha-folate receptor targeted inhibitor of the thymidylate synthase, and ONX 0912, an oral proteasome inhibitor, are currently in Phase 1 testing.  For more information about Onyx, visit the company's website at www.onyx-pharm.com.

Nexavar® (sorafenib) tablets is a registered trademark of Bayer HealthCare Pharmaceuticals Inc.

This news release contains "forward-looking statements" of Onyx within the meaning of the federal securities laws.  These forward-looking statements include, without limitation, statements regarding sales trends and commercial activities, the timing, progress and results of clinical development, and the potential expansion of Onyx's product portfolio.  These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those anticipated, including, but not limited to, risks and uncertainties related to:  Nexavar being our only approved product; competition; failures or delays in our clinical trials; dependence on our collaborative relationship with Bayer; market acceptance and the rate of adoption of our products; pharmaceutical pricing and reimbursement pressures; serious adverse side effects, if they are associated with Nexavar; government regulation; possible failure to realize the anticipated benefits of business acquisitions or strategic investments; protection of our intellectual property; the indebtedness incurred through the sale of our 4.0% convertible senior notes due 2016; product liability risks; and the anticipated benefits of the acquisition of Proteolix.  Reference should be made to Onyx's Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission, under the heading "Risk Factors" for a more detailed description of these and other risks, as well as the company's subsequent quarterly report on Form 10-Q.  Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this release.  Onyx undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date of this release except as required by law.

(See attached tables.)

SOURCE Onyx Pharmaceuticals, Inc.