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Onyx Pharmaceuticals, Inc. : Onyx Pharmaceuticals Reports Full Year and Fourth Quarter 2012 Financial Results

02/21/2013 | 04:59pm US/Eastern
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Onyx Pharmaceuticals Reports Full Year and Fourth Quarter 2012 Financial Results

Kyprolis® Net Sales Reach $64M in 2012, Nexavar® Continues Strong Regional Growth as Total Worldwide Sales Exceed $1B, Stivarga® Royalty Revenue of $8M in 2012

South San Francisco, CA. - Feb. 21, 2013

Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) today reported its financial results for the full year and fourth quarter 2012 and provided a business update.

"This past year was transformational, as Onyx grew from a company with one therapy in two indications to one with three therapies approved in four indications and positive Phase 3 data for another two potential indications," said N. Anthony Coles, M.D., chairman and chief executive officer of Onyx. "We enter 2013 with the architecture for near-term momentum in our business and sustained growth. The successful launch of Kyprolis, Onyx's first wholly-owned product, serves as the foundation of our emerging proteasome inhibitor franchise, and we are committed to investing in a broad Phase 3 clinical development program across all lines of therapy to reach more patients globally. 2013 will be an important year for commercial execution in the United States, while developing select capabilities to expand our business internationally."

Dr. Coles continued, "The second launch of 2012 was Bayer's Stivarga with additional regulatory actions expected this year in the United States, Europe and Japan. Contributions from worldwide sales of Nexavar and royalty revenue from Stivarga provide increasing cash flow to enable the strategic investment in Kyprolis and oprozomib."

Onyx reported total revenue of $362.2 million for the full year 2012 and $127.9 million for the fourth quarter 2012. Onyx reported non-GAAP net loss of $162.9 million, or $2.50 per diluted share, for the full year 2012 and $24.0 million, or $0.36 per diluted share, for the fourth quarter 2012. On a GAAP basis, Onyx reported net loss of $187.8 million, or $2.88 per diluted share, for the full year 2012 and $42.9 million, or $0.64 per diluted share, for the fourth quarter 2012. A description of the non-GAAP calculations and reconciliation to comparable GAAP financial measures is provided in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Financial Measures."

Revenue

For the full year and fourth quarter of 2012, Onyx reported total revenue of $362.2 million and $127.9 million, respectively, as compared to total revenue of $447.2 million and $237.0 million for the comparable periods in 2011. For the full year and fourth quarter of 2011, total revenue included $160.0 million in contract revenue from collaboration received from the sale of the Japan royalty rights of Nexavar® (sorafenib) tablets.

  • Revenue from the Nexavar collaboration agreement for the full year and fourth quarter of 2012 was $288.4 million and $72.9 million, respectively, as compared to $287.0 million and $76.8 million for the comparable periods in 2011. The increase in full year revenue from collaboration is primarily a result of increased Nexavar net sales as recorded by Bayer, excluding Japan, of $861.4 million and $229.1 million for the full year and fourth quarter of 2012, respectively, as compared to $839.9 million and $231.5 million for the full year and fourth quarter of 2011. The increase in full year Nexavar sales was driven by increased sales in the U.S. and demand driven growth in emerging markets including Asia Pacific and Latin America.
  • Kyprolis® (carfilzomib) for Injection net sales for the full year and fourth quarter of 2012 were $64.0 million and $45.3 million, respectively, representing orders shipped to and received by end customers such as physician offices and hospitals post-approval. The U.S. Food and Drug Administration (FDA) granted accelerated approval of Kyprolis on July 20, 2012. In addition, Onyx recorded deferred revenue of $9.8 million as of December 31, 2012, representing Kyprolis inventory at distributors which has not yet shipped to physician offices and hospitals.
  • Stivarga® (regorafenib) tablets royalty revenue was $8.3 million and $8.2 million for the full year and fourth quarter of 2012, respectively, following marketing approval by the U.S. FDA on September 27, 2012. Onyx receives a 20% royalty on Bayer's global net sales of Stivarga in human oncology.
Operating Expenses

Non-GAAP cost of goods sold was $1.3 million and $0.8 million for the full year and fourth quarter 2012, respectively. Cost of goods sold related to sales of Kyprolis is not representative of Onyx's future expectations of cost of goods sold because product costs associated with Kyprolis sales in 2012 were charged to research and development expense in periods prior to approval.

Non-GAAP research and development expense was $316.0 million and $80.3 million for the full year and fourth quarter 2012, respectively, compared to $249.1 million and $82.5 million for the same periods in 2011. Higher research and development expense between periods was primarily due to the global development of Kyprolis, particularly the ongoing Phase 3 ASPIRE, FOCUS and ENDEAVOR trials. On a GAAP basis, research and development expense was $325.3 million and $82.6 million for the full year and fourth quarter 2012, respectively, compared to $268.1 million and $84.0 million for the same periods in 2011.

Non-GAAP selling, general and administrative expense was $198.1 million and $68.0 million for the full year and fourth quarter 2012, respectively, compared to $147.8 million and $50.1 million for the same periods in 2011. Higher selling, general and administrative expense between periods was primarily related to hiring of the field force associated with the Kyprolis commercial launch as well as promotional costs. On a GAAP basis, selling, general and administrative expense was $224.2 million and $74.6 million for the full year and fourth quarter 2012, respectively, compared to $168.0 million and $52.6 million for the same periods in 2011.

Onyx recorded contingent consideration expense of $69.2 million and $2.9 million for the full year and fourth quarter 2012, respectively, compared to a benefit of $93.5 million and $116.7 million for the same periods in 2011. The increase in contingent consideration expense for the full year was primarily a result of the accelerated approval of Kyprolis.

Amortization expense for certain acquired intangible assets was $9.3 million and $5.2 million for the full year and fourth quarter 2012, respectively, and reflects the amortization of a portion of the intangible asset, which was acquired in the 2009 acquisition of Proteolix, Inc.

Provision for Income Taxes

Provision for income taxes for the full year 2012 primarily consisted of a $96.8 million non-cash tax benefit to recognize a change in the net deferred tax balance related to the U.S. approval of Kyprolis.

Cash, Cash Equivalents and Marketable Securities

On December 31, 2012, cash, cash equivalents and current and non-current marketable securities were $492.8 million, compared to $668.4 million at December 31, 2011. This decrease was largely due to Kyprolis development and commercialization expenses, partly offset by cash proceeds from the exercise of employee stock options. During January 2013, Onyx raised approximately $352 million in net proceeds from a public offering of 4.4 million shares of common stock.

Non-GAAP Financial Measures

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, non-GAAP net income (loss) per share - diluted, non-GAAP cost of goods sold, non-GAAP research and development expense and non-GAAP selling, general and administrative expense. The following 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 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 are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP. A description of the non-GAAP calculations and reconciliation to comparable GAAP financial measures is provided in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Financial Measures."

Non-GAAP operating expenses exclude contingent consideration expense (benefit), employee stock-based compensation expense, imputed interest related to the convertible senior notes due 2016, the write-off of certain research and development expenses, equity investment impairment, the impact of the S*BIO termination, lease termination exit costs, amortization of certain acquired intangibles and related tax impact of certain acquired intangible assets.

Management Conference Call Today

Onyx will host a webcast and conference call with management to discuss full year and fourth quarter 2012 financial results, as well as provide a general business overview, today at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time).

To access a live audio webcast of the conference call, log onto the Company's website at: http://www.onyx.com/investors/event-calendar

To access the live conference call, dial 847-585-4405 and use the passcode 34138405#. A replay of the call will be available on the Onyx website, or by dialing 630-652-3042 and using the passcode 34138405# beginning approximately one hour after the teleconference concludes through March 7, 2013.

About Nexavar® (sorafenib) tablets

Nexavar is approved in the U.S. for the treatment of patients with unresectable hepatocellular carcinoma and for the treatment of patients with advanced renal cell carcinoma.

For information about Nexavar, including U.S. Nexavar prescribing information, visit www.nexavar.com or call 1.866.NEXAVAR (1.866.639.2827).

About Kyprolis® (carfilzomib) for Injection

Kyprolis® (carfilzomib) for Injection is approved in the U.S. for the treatment of patients with multiple myeloma who have received at least two prior therapies including bortezomib and an immunomodulatory agent (IMiD), and have demonstrated disease progression on or within 60 days of completion of the last therapy. Approval was based on response rate. Clinical benefit, such as improvement in survival or symptoms, has not been verified.

Full prescribing information is available at http://www.kyprolis.com.

About Stivarga® (regorafenib) tablets

Stivarga is approved in the U.S. for the treatment of patients with mCRC who have been previously treated with fluoropyrimidine-, oxaliplatin- and irinotecan-based chemotherapy, an anti-VEGF therapy, and, if KRAS wild type, an anti-EGFR therapy.

For full prescribing information, including BOXED WARNINGS, visit www.stivarga-us.com.

About Onyx Pharmaceuticals, Inc.

Based in South San Francisco, California, Onyx Pharmaceuticals, Inc. is a global biopharmaceutical company engaged in the development and commercialization of innovative therapies for improving the lives of people with cancer. The Company is focused on developing novel medicines that target key molecular pathways. For more information about Onyx, visit the Company's website at www.onyx.com.

Forward-Looking Statements

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 our expected financial results for 2013, the anticipated growth of our business, investments in and launch of Kyprolis, development of our oral proteasome inhibitor oprozomib, global expansion, generation of cash flows from sales of Nexavar, commercial, regulatory, and clinical results and milestones, royalties on Bayer's global net sales and development of Stivarga, promotion of Stivarga in the U.S., overall costs from sales of Kyprolis and our future clinical trials. 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® (sorafenib) tablets, Kyprolis® (carfilzomib) for Injection and Stivarga® (regorafenib) tablets being the only approved products from which we may obtain revenue; competition; failures or delays in our clinical trials or the regulatory process; dependence on our collaborative relationship with Bayer; supply of Nexavar, Stivarga or Kyprolis; market acceptance and the rate of adoption of Nexavar, Stivarga and Kyprolis; pharmaceutical pricing and reimbursement pressures; serious adverse side effects, if they are associated with Nexavar, Stivarga or Kyprolis; government regulation; possible failure to realize the anticipated benefits of business acquisitions or strategic investments; 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 Prospectus Supplement dated January 16, 2013 to Prospectus dated January 15, 2013 filed with the Securities and Exchange Commission (the "Commission") on January 17, 2013, as updated by Onyx's subsequent filings with the 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.

(See attached tables)

Kyprolis® (carfilzomib) for Injection
Nexavar® (sorafenib) tablets is a registered trademark of Bayer HealthCare Pharmaceuticals, Inc.
Stivarga® (regorafenib) is a Bayer compound being developed by Bayer. Onyx receives a 20% royalty on global net sales in human oncology. Bayer and Onyx are jointly promoting Stivarga in the U.S.

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