Onyx Pharmaceuticals Reports Full Year and Fourth Quarter 2010 Financial Results

EMERYVILLE, Calif., Feb. 23, 2011 /PRNewswire/ -- Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX) today reported its financial results for the full year and fourth quarter 2010. Onyx reported non-GAAP net income of $39.2 million, or $0.63 per diluted share, for the full year 2010 compared to non-GAAP net income of $54.4 million, or $0.89 per diluted share, for the same period in 2009. Onyx reported a non-GAAP net loss of $17.4 million, or $0.28 per diluted share, for the fourth quarter 2010 compared to non-GAAP net income of $8.8 million, or $0.14 per diluted share, for the same period in 2009. Non-GAAP net income excludes, among other items, adjustments to contingent consideration expense in connection with our acquisition of Proteolix Inc., or Proteolix; employee stock-based compensation expense and non-cash imputed interest expense related to the application of Accounting Standards Codification ("ASC") 470-20.

On a GAAP basis, Onyx reported a net loss of $84.8 million, or $1.35 per diluted share, for the full year 2010 compared to net income of $16.2 million, or $0.27 per diluted share, in the same period in 2009. On a GAAP basis, Onyx reported a net loss of $17.1 million, or $0.27 per diluted share, for the fourth quarter 2010 compared to net loss of $5.5 million, or $0.09 per diluted share, in the same period in 2009. 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 (Loss)."

"Strong Nexavar sales for the fourth quarter and full year 2010 provided accelerated momentum across our business," said N. Anthony Coles, M.D., president and chief executive officer of Onyx. "We start 2011 well positioned to drive our Nexavar and proteasome inhibitor franchises forward. The NDA for carfilzomib in relapsed and refractory multiple myeloma is on track for filing as early as mid-year; our Phase 3 confirmatory trials, ASPIRE and FOCUS, are advancing; and ONX 0912, our next generation proteasome inhibitor, is expected to advance to Phase 2. Importantly, we are also generating additional Nexavar data for liver cancer and exploring potential new indications to support its expanded use in even greater numbers of patients."

Operating Revenue

Global Nexavar net sales which are recorded by Onyx's collaborator Bayer HealthCare Pharmaceuticals Inc., or Bayer, were $934.0 million and $257.4 million for the full year and fourth quarter 2010, respectively, an increase of 11% and 9%, respectively, compared to $843.5 million and $235.2 million in the same periods in 2009. Onyx and Bayer are marketing and developing Nexavar^® (sorafenib) tablets, an anticancer therapy currently approved for the treatment of unresectable liver cancer and advanced kidney cancer in over 100 countries worldwide.

For the full year and fourth quarter 2010, Onyx reported total operating revenue of $324.5 million and $70.0 million, respectively, compared to $251.4 million and $68.3 million for the same periods in 2009. Total operating revenue is comprised of revenue under the Nexavar collaboration agreement and revenue under the exclusive license agreement entered into with Ono Pharmaceutical Co., Ltd., or Ono. Revenue under the Nexavar collaboration agreement was $265.4 million and $70.0 million for the full year and fourth quarter 2010, respectively, compared to $250.4 million and $67.3 million for the same periods in 2009.

Operating Expenses

Onyx recorded research and development expenses of $185.7 million and $54.3 million for the full year and fourth quarter 2010, respectively, compared to $128.5 million and $36.0 million for the same periods in 2009. Higher research and development expenses between periods were primarily due to investments in the development of carfilzomib.

Selling, general and administrative expenses were $114.2 million and $36.9 million for the full year and fourth quarter 2010, respectively, compared to $101.1 million and $32.2 million for the same periods in 2009. Higher selling, general and administrative expenses between periods were primarily due to planned increases in spending as a result of the acquisition of Proteolix and an increase in employee-related costs.

Onyx recorded $92.9 million of non-cash contingent consideration expense for the full year 2010 and $8.2 million of non-cash benefit for the fourth quarter 2010 associated with changes in the fair value of the liability for contingent consideration recorded for the potential milestone payments under the Proteolix acquisition. The increase in the fair value for the full year 2010 resulted from changes in the assessed probability of technical and regulatory success (PTRS) and the passage of time, partially offset by a benefit recorded as a result of an amendment (the "Amendment") to the Proteolix Plan of Merger and Acquisition (the "Merger Agreement") executed in January 2011. The change in the PTRS was due to positive preliminary results from the 003-A1 trial, a Phase 2b study of carfilzomib, and the 006 trial, a Phase 1b study of carfilzomib plus lenalidomide and low-dose dexamethasone, both in patients with multiple myeloma. The Amendment primarily modifies provisions in the Merger Agreement related to one of the milestone events.

Interest Expense

Interest expense of $19.4 million and $4.9 million for the full year and fourth quarter 2010, respectively, primarily relates to the 4.0% convertible senior notes due 2016 issued in August 2009 and includes non-cash imputed interest expense of $9.0 million and $2.4 million, respectively, as a result of the application of ASC 470-20.

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents, and current and non-current marketable securities of $577.9 million at December 31, 2010 were comparable to $587.3 million at December 31, 2009. This excludes restricted cash of $31.9 million and $27.6 million at December 31, 2010 and December 31, 2009, respectively.  

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 February 23, 2011.  Interested parties may access a live webcast of the presentation on the company's website at:

http://www.onyx-pharm.com/view.cfm/32/Event-Calendar

or by dialing 847-413-3362 and using the passcode 29045749#.  A replay of the presentation will be available on the Onyx website or by dialing 630-652-3042 and using the passcode 29045749# approximately one hour after the teleconference concludes. The replay will be available through March 9, 2011.

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, Inc., is developing and marketing Nexavar® (sorafenib) tablets, a small molecule drug that 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.  Beyond Nexavar, Onyx has established a development pipeline of anticancer compounds at various stages of clinical testing, including carfilzomib, a next generation proteasome inhibitor, that is currently being evaluated in multiple clinical trials for the treatment of patients with relapsed or relapsed/refractory multiple myeloma and solid tumors.  ONX 0801, an alpha-folate receptor targeted inhibitor of the thymidylate synthase, and ONX 0912, an oral proteasome inhibitor, are currently in Phase 1 testing.  For more information about Onyx, visit the company's website at www.onyx-pharm.com.

Nexavar® (sorafenib) tablets is a registered trademark of Bayer HealthCare Pharmaceuticals, Inc.

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, the timing, progress and results of clinical development, the potential expansion of Onyx's product portfolio and our 2011 guidance. 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; we may never receive marketing approval for carfilzomib; competition; failures or delays in our clinical trials; dependence on our collaborative relationship with Bayer; if approved, we may be unsuccessful in launching, maintaining adequate supply of or obtaining reimbursement for carfilzomib; 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 or carfilzomib; government regulation; possible failure to realize the anticipated benefits of business acquisitions or strategic investments, including Proteolix, Inc.; protection of our intellectual property; the indebtedness incurred through the sale of our 4.0% convertible senior notes due 2016; and product liability risks. Reference should be made to Onyx's Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission, under the heading "Risk Factors" for a more detailed description of these and other risks. 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.

(2) Under the "if-converted" method, interest and issuance costs and potential common shares related to the Company's convertible senior notes were excluded in the computation of diluted per share amounts for the three months ended December 31, 2010 and 2009 and the years ended December 31, 2010 and 2009 because their effect would be anti-dilutive.

(3) This press release includes the following non-GAAP financial measures: non-GAAP net income (loss), non-GAAP net income (loss) – diluted, non-GAAP net income (loss) per share, and non-GAAP net income (loss) per share – diluted. 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 items from GAAP net income (loss) and diluted per share amounts:

(4) Under the "if-converted" method, interest and issuance costs and potential common shares related to the Company's convertible senior notes were excluded from non-GAAP diluted per share amounts for the three months ended December 31, 2010 and 2009 and the year ended December 31, 2010 because their effect would be anti-dilutive.

(5) Derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2009.

SOURCE Onyx Pharmaceuticals, Inc.