Onyx Misses, Slips to Loss – Analyst Blog

Onyx Pharmaceuticals (ONXX) reported a first quarter fiscal 2010 loss of 19 cents per share, worse than a profit of 7 cents reported in the year-ago period. However, after adjusting for non-recurring items and treating stock-based compensation as a regular expense, the company’s loss per share is 10 cents. The Zacks Consensus Estimate for the reported quarter was a profit of 1 cent.

 

Onyx reported revenues from its Nexavar (sorafenib) collaboration agreement of $62.9 million, up 17% from the first quarter of 2009. The increase in revenue is primarily due to an increase in Nexavar sales.

 

Nexavar is currently approved and marketed for the treatment of liver cancer and advanced kidney cancer in the US, the European Union as well as other territories worldwide. The drug, manufactured by Bayer (BAYRY), is being studied for several other indications as well – breast cancer, ovarian cancer, thyroid cancer and in combination therapy with chemotherapy agents.

 

Onyx and Bayer are splitting the development cost for Nexavar and will share profits equally in all territories excluding Japan. Bayer pays royalty to Onyx on sales in Japan. Despite the increase in revenues, Onyx slipped into a loss primarily due to a 35% increase in operating expenses which came in at $68.3 million. Additionally, the company had to incur an interest expense of $4.7 million during the quarter related to convertible notes issued in August 2009.

 

Research and development expenses increased 51% to $43.6 million due to higher expenses for the development of one of its pipeline candidate, carfilzomib. Selling, general and administrative expenses were higher by 12.6% on account of headcount related expenses arising from the integration with Proteolix and increased legal fees.

Onyx also announced the expansion of its collaboration agreement with S*BIO Pte Ltd of Singapore, entered in January 2009 for the development of Janus Kinase inhibitors. The expanded program aims to target new indications such as hematologic malignancies and myeloproliferative disorders.