Although Onyx Pharmaceuticals’ (ONXX) third quarter EPS of $0.76 was well above expectations, we note that results were driven by a license payment from Ono Pharma, which boosted revenues by $59.2 million. Excluding this, revenues declined 7.9% to $63.7 million, mainly due to Nexavar’s disappointing performance.
Following the release of third quarter results, Onyx reduced its 2010 guidance for Nexavar for the second time. We believe that intense competition, foreign exchange fluctuations, disappointing performance in Japan, reimbursement issues in the Asia Pacific and other regions, the impact of US health care reform and EU pricing pressure will continue to affect Nexavar’s performance going forward.
Moreover, with carfilzomib not expected to gain approval before late 2011/early 2012, we remain concerned about Onyx dependence on Nexavar, We maintain our Underperform recommendation on the stock and have increased our 2010 and 2011 loss estimates for Onyx based on concerns regarding Nexavar.
ONYX PHARMA INC (ONXX): Free Stock Analysis Report
Zacks Investment Research
