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Onyx Pharmaceuticals Reports Second Quarter 2009 Financial Results; Nexavar Global Net Sales Reach $201 Million, 19% Increase Over Second Quarter 2008

Posted on: Tuesday, 4 August 2009, 15:00 CDT

EMERYVILLE, Calif., Aug. 4 /PRNewswire-FirstCall/ -- Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX) today reported its financial results for the second quarter 2009. Global Nexavar net sales as reported by Onyx's collaborator Bayer HealthCare Pharmaceuticals, or Bayer, were $201.0 million for the second quarter 2009, a 19% increase compared to $168.5 million in the same period in 2008. Onyx and Bayer are marketing and developing Nexavar(R) (sorafenib) tablets, an anticancer therapy currently approved for the treatment of liver cancer and advanced kidney cancer in the U.S., European Union, Japan and other territories.

Onyx reported non-GAAP net income, excluding employee stock-based compensation expense, of $15.3 million, or $0.27 per diluted share, for the second quarter 2009 compared to non-GAAP net income of $8.7 million, or $0.15 per diluted share for the same period in 2008. Net income for the second quarter 2009 was primarily driven by higher Nexavar sales offset by the company's expanded clinical development efforts, increased commercial costs to support the brand and lower investment income due to current macroeconomic conditions. On a GAAP basis Onyx reported net income of $9.4 million, or $0.16 per diluted share, for the second quarter 2009 compared to net income of $4.5 million, or $0.08 per diluted share, in the same period in 2008. 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."

"Excellent Nexavar sales performance is driving bottom-line growth and, together, these results demonstrate our continued success in building a strong business foundation for Onyx," said N. Anthony Coles, M.D., president and chief executive officer of Onyx. "Importantly, statistically significant data recently reported from our large randomized Phase 2 breast cancer trial support our belief that Nexavar has the potential to become a standard of care across a variety of additional tumor types. We believe that our growing commercial business, compelling clinical program, and strong development pipeline position Onyx to continue to grow and build value on a sustainable basis."

Revenue from Collaboration Agreement

For the second quarter 2009, Onyx reported revenue from its Nexavar collaboration agreement of $60.2 million compared to $45.1 million for the same period in 2008. The 34% increase in revenue from collaboration agreement between periods resulted from an increase in Nexavar sales and royalty revenue and a decrease in Nexavar commercial expenses.

Operating Expenses

Onyx recorded research and development expenses of $28.0 million in the second quarter 2009, compared to $23.5 million for the same period in 2008. Higher research and development expenses in the second quarter 2009 were primarily due to planned increases in the development program for Nexavar across additional tumor types, such as colorectal cancer and adjuvant liver cancer, and Onyx's costs to further develop ONX 0801. Research and development expenses included $1.1 million and $0.8 million of employee stock-based compensation expense for the second quarter of 2009 and 2008, respectively. Selling, general and administrative expenses were $23.5 million in the second quarter 2009, compared to $19.8 million for the same period in 2008. Higher selling, general and administrative expenses were primarily due to headcount-related expenses to support Onyx's growth. Selling, general and administrative expenses included $4.8 million and $3.4 million of employee stock-based compensation expense for the second quarter 2009 and 2008, respectively.

Investment Income

Investment income was $1.0 million for the second quarter 2009 compared to $2.7 million in the same period in 2008. The decrease was primarily due to lower effective interest rates as a result of market conditions as well as a change in the asset allocation of Onyx's investment portfolio.

Cash, Cash Equivalents and Marketable Securities

At June 30, 2009, cash, cash equivalents, and current and noncurrent marketable securities were $469.5 million, compared to $458.0 million at December 31, 2008. This increase was primarily due to cash provided by operations.

Six-Month Results

Nexavar net sales, as recorded by Bayer, were $379.1 million and $320.4 million for the six months ended June 30, 2009 and 2008, respectively. Excluding employee stock-based compensation expense, non-GAAP net income for the six months ended June 30, 2009 was $23.4 million, or $0.41 per diluted share, compared to non-GAAP net income of $29.4 million, or $0.52 per diluted share for the same period in 2008. A description of the non-GAAP calculations is provided below in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Net Income." For the six months ended June 30, 2009, on a GAAP basis Onyx recorded net income of $13.4 million, or $0.24 per diluted share, compared with a net income of $19.9 million, or $0.35 per diluted share, for the same period in 2008.

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, 2009. The live webcast will be available at:

http://www.onyx-pharm.com/wt/page/event_calendar

or by dialing 847-413-3362 and using the passcode 24875257. A replay of the presentation will be available on the Onyx website or by dialing 630-652-3044 and using the passcode 24875257 later in the day. The replay will be available through September 4, 2009.

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, is developing and marketing Nexavar(R) (sorafenib) tablets, a small molecule drug. Nexavar 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. For more information about Onyx, visit http://www.onyx-pharm.com.

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

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 and the timing, progress and results of clinical development, regulatory filings and actions. 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; and product liability risks. Reference should be made to Onyx's Annual Report on Form 10-K for the year ended December 31, 2008, 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 reports on Form 10Q. 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.) ONYX PHARMACEUTICALS, INC. CONDENSED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- Revenue: Revenue from collaboration agreement $60,219 $45,072 $113,936 $93,927 ------- ------- -------- ------- Total operating revenue $60,219 45,072 $113,936 93,927 Operating expenses: Research and development (1) 28,022 23,498 56,842 42,052 Selling, general and administrative (1) 23,507 19,822 45,459 39,667 ------ ------ ------ ------ Total operating expenses 51,529 43,320 102,301 81,719 ------ ------ ------- ------ Income from operations 8,690 1,752 11,635 12,208 ----- ----- ------ ------ Investment income, net 972 2,662 2,092 7,933 Provision (benefit) for income taxes 288 (60) 288 249 --- --- --- --- Net income $9,374 $4,474 $13,439 $19,892 ====== ====== ======= ======= Net income per share: Basic $0.16 $0.08 $0.24 $0.36 ===== ===== ===== ===== Diluted $0.16 $0.08 $0.24 $0.35 ===== ===== ===== ===== Shares used in computing net income per share: Basic 56,890 55,675 56,803 55,531 ====== ====== ====== ====== Diluted 57,110 56,472 57,178 56,534 ====== ====== ====== ====== (1) Includes employee stock-based compensation charges of: Research and development $1,117 $809 $1,769 $1,389 Selling, general, and administrative 4,842 3,444 8,193 8,080 ----- ----- ----- ----- Total employee stock-based compensation $5,959 $4,253 $9,962 $9,469 ====== ====== ====== ======

ONYX PHARMACEUTICALS, INC. CALCULATION OF REVENUE FROM COLLABORATION AGREEMENT (In thousands, unaudited) Three Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ---- (In thousands) (In thousands) Nexavar product revenue, net (as recorded by Bayer) $200,983 $168,520 $379,052 $320,416 ======== ======== ======== ======== Revenue subject to profit sharing (as recorded by Bayer) $181,345 $156,547 $348,319 $308,443 Combined cost of goods sold, distribution, selling, general and administrative expenses 74,343 80,135 146,222 142,838 ------ ------ ------- ------- Combined collaboration commercial profit 107,002 76,412 202,097 165,605 ------- ------ ------- ------- Onyx's share of collaboration commercial profit 53,501 38,206 101,049 82,803 Reimbursement of Onyx's shared marketing expenses 5,344 6,028 10,736 10,286 Royalty revenue 1,374 838 2,151 838 ----- --- ----- --- Revenue from collaboration agreement $60,219 $45,072 $113,936 $93,927 ======= ======= ======== =======

ONYX PHARMACEUTICALS, INC. CONDENSED BALANCE SHEETS (In thousands) June 30, Dec. 31, 2009 2008 (unaudited) (2) ----------- ----------- Assets Cash, cash equivalents and marketable securities $431,742 $418,424 Other current assets 53,525 43,635 ------ ------ Total current assets 485,267 462,059 Property and equipment, net 2,724 3,363 Marketable securities, non-current 37,759 39,622 Other assets 4,740 4,723 ----- ----- Total assets $530,490 $509,767 ======== ======== Liabilities and stockholders' equity Current liabilities 21,367 33,304 Other long-term liabilities 1,074 1,263 Stockholders' equity 508,049 475,200 ------- ------- Total liabilities and stockholders' equity $530,490 $509,767 ======== ======== (2) Derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year-ended December 31, 2008.

ONYX PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (In thousands, except per share amounts) (unaudited) Three Months Ended Six Months Ended June 30, June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ---- GAAP net income $9,374 $4,474 $13,439 $19,892 Non-GAAP adjustments: Employee stock-based compensation under FAS 123R (4) 5,959 4,253 9,962 9,469 ----- ----- ----- ----- Non-GAAP net income (3) $15,333 $8,727 $23,401 $29,361 ======= ====== ======= ======= GAAP diluted net income per share $0.16 $0.08 $0.24 $0.35 Non-GAAP adjustments: Employee stock-based compensation under FAS 123R (4) 0.11 0.07 0.17 0.17 ---- ---- ---- ---- Non-GAAP diluted net income per share (3) $0.27 $0.15 $0.41 $0.52 ===== ===== ===== ===== Diluted shares 57,110 56,472 57,178 56,534 (3) This press release includes the following non-GAAP financial measures: non-GAAP net income and non-GAAP diluted net income per share. The foregoing table reconciles these non-GAAP measures to the most comparable financial measures calculated in accordance with GAAP. Onyx management uses these non-GAAP financial measures to monitor and evaluate our operating results and trends on an on-going basis and internally for operating, budgeting and financial planning purposes. Onyx management believes the non-GAAP information is useful for investors by offering them the ability to better identify trends in our business and better understand how management evaluates the business. These non-GAAP measures have limitations, however, because they do not include all items of income and expense that affect Onyx. These non-GAAP financial measures that management uses are not prepared in accordance with, and should not be considered in isolation of, or an as alternative to, measurements required by GAAP. These non-GAAP financial measures exclude the following item from GAAP net income and diluted EPS: (4) Employee stock-based compensation under FAS 123R: Onyx management excludes the effects of employee stock-based compensation because of varying available valuation methodologies, subjective assumptions and the variety of award types; such exclusion facilitates comparisons of Onyx's operating results to peer companies.

SOURCE Onyx Pharmaceuticals, Inc.

Source: PR Newswire

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