Thursday, February 26, 2009

Onyx Pharmaceuticals Sees Strong 2009

Onyx Pharmaceuticals (ONXX) reported strong sales of Nexavar for the fourth quarter of 2008, at the February 23, 2009 analyst conference. The liver and kidney cancer therapy, sold though a joint venture with Bayer, resulted in $49.6 million in revenues for Onyx. This is up 24% from Q3 2008 and up 90% from the year earlier.

Onyx management sees global 2009 Nexavar sales by Bayer in the range of $850 to $875 million. Operating expenses are expected to rise about 5% for the year. After costs, Onyx splits the profits with Bayer. In Q4 profit ran at about 50% of revenues.

In the fourth quarter GAAP net income was negative $30.2 million. However, this included a one-time charge for acquired research expenses of $34 million.

Onyx just became profitable this year. Prior to 2008 it had been selling Nexavar for kidney cancer. Sales for liver cancer ramped up in 2008. A number of large national markets are in the process or approving Nexavar for liver cancer, or of approving reimbursements for it. As these mostly European and Asian markets come on line in 2009 and 2010 they will drive revenue growth.

The company is also hoping that Nexavar will prove to be effective in other kinds of cancer, including lung cancer, breast cancer, thyroid cancer, and melanoma. Clinical tests have given positive indications, but they won't know for sure until Phase III tests are completed and the FDA makes its rulings.

For a more detailed report on Q4, see my Onyx analyst conference summary for February 23, 2009.

The main risks for all drug companies are competition from new products and the discover of previously-unknown adverse effects.

Onyx certainly seems poised to turn into a cash cow, but the risks should not be discounted.

Keep diversified!

Onyx Pharmaceuticals
My main Onyx page

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