Onyx Pharmaceuticals Breast Cancer Trial Results

Onyx Pharmaceuticals (ONXX) held an analyst meeting this morning to discuss the results from one of its clinical trials for Nexavar (sorafenib) for breast cancer. It also issued a press release on the results of a separate trial for the same indication, but with a different simultaneous chemotherapy. All together these two Phase II trials indicate that Onyx should design and initiate Phase III studies for this indication. If Phase III results are positive, then it would be likely that the FDA would approve Nexavar in combintion with chemotherapy for HER-2 negative breast cancer. Investors (and cancer patients) should keep in mind that 2011 would be an early date for this event.

Onyx is not exactly the darling of the investment community right now, and several analysts asked questions that have been circulating about the validity of the study results.

In the conference and the September 23, 2009 Nexavar breast cancer press release, the study methods were explained in detail. Patients had HER-2 negative breast cancer that was locally advanced or metastatic. The study was double-blind and had 229 patients. All patients received capecitabine, a common chemotherapy agent for breast cancer, especially in Europe. Half reveived Nexavar and half a placebo.

Those treated in the Nexavar arm had progression-free survival (PFS) of 6.4 months, compared to 4.1 months in the chemotherapy-alone arm.

That is an extremely good result in the world of breast cancer. Jose Baselga, M.D., who spoke at the conference and was the principle investigator for the study, reported that a colleague told him the results were comparable to the early results for Herceptin (a Genentech drug) for HER-2 positive breast cancer. About one-fourth of malignant breast cancers are HER-2 positive.

Chemotherapy is notably rough on patients, so toxicity of added therapies is always a big concern. The main additional side effect from Nexavar was hand-foot rash. These rashes could be serious, but were managed by gradually reducing dosages of the two compounds in the patients affected. One analyst asked if there could have been investigator bias because patients with the severe rash could be assumed to be on Nexavar. Doctor Baselga disputed that, pointing out that the rash affected those getting capecitabine only, but to a lesser extent. In a Phase III trial additional precautions could be taken to eliminate this issue.

The press release today for Nexavar in combination with Paclitaxel for advanced breast cancer was vague, but that is because the industry practice is to have detailed results presented at professional medical conferences. The key result was that the Nexavar patients "demonstrated a positive trend towards improvement of progression-free survival in the treatment group." This may turn out to not be sufficient to warrant a Phase III trial with this combination, but even so lends support to Nexavar's effectiveness for breast cancers.

So why did Onyx stock take a dive today? Probably two different issues. One is that Phase III trials are expensive and will probably eat into Onyx's not particularly robust profits in 2010 and 2011. Nexavar is already generating significant revenue for Onyx's partner Bayer: in the latest quarter global sales were $200 million, but Onyx reported GAAP net income of only $9.4 million ($15.3 million non-GAAP). This is largely due to expenses for ongoing trials for Nexavar for kidney (renal) and liver cancer. Other trials are planned or under way for lung and other coancers. Nexavar is still being rolled-out globally, which is an expensive process since drugs must be approved for sale (and for reimbursement) on a nation-by-nation basis.

But the big clunker is the plan to make a major acquisition. Onyx does not want to be dependent on a single therapy, Nexaver, no matter how broadly it might be applied in oncology. But spending a large sum of cash on a promissing, but not-yet-approved, therapy is always a big gamble.

I own Onyx stock, but have spread my risk over many therapies by holding a number of biotechnology stocks. I think Nexavar revenues, and Onyx net income, are going to improve in 2010, from liver and kidney cancer.

Onyx won't buy a clunker on purpose, so I don't think there should be any deep discounting because of an acquisition that has not yet been decided upon. But Onyx is definately a long-term play. It may be cheap now, but the big payoffs won't be until 2011 or later, when the global rollout for liver cancer is complete and we have more definitive data on Nexavar's benefit for other kinds of cancers.

Keep diversified!

See also:
my August 4, 2009 Onyx Analyst Conference Summary
Onyx Pharmaceuticals web site