Advertisement
Global Nexavar net sales as reported by Bayer HealthCare Pharmaceuticals,Inc., or Bayer, were $180.9 million for the quarter ended September 30, 2008,a 73% increase over the $104.6 million reported in the same period in 2007.Onyx with its collaborator, Bayer, is marketing and developing Nexavar(R)(sorafenib) tablets, an anticancer therapy currently approved for thetreatment of liver cancer and advanced kidney cancer in the U.S., EuropeanUnion, and other territories internationally.
Advertisement
"As demonstrated by Nexavar's continued sales growth, we are furtherbuilding our leadership in the liver cancer market with ongoing productlaunches in multiple countries, including Italy and China," said Tony Coles,M.D., president and chief executive officer of Onyx. "The significant growingcommercial contribution from Nexavar allows us to continue to invest inadditional possible indications for Nexavar, as well as to explore in-licensing opportunities to grow Onyx strategically over time."
Net Revenue from Unconsolidated Joint Business
For the quarter ended September 30, 2008, Onyx reported net revenue fromunconsolidated joint business of $39.9 million compared to $17.6 million forthe same period in 2007. The increase in net revenue from unconsolidatedjoint business over the prior year is due to an increase in Nexavar revenuerecognized by Bayer and royalty revenue offset by an increase in combinedcommercial and research and development expenses for Nexavar. The calculationof this line item is shown in the table following the Condensed Statement ofOperations.
Operating Expenses
In the third quarter of 2008, Onyx recorded research and developmentexpenses of $11.0 million, an increase of $3.0 million over the third quarterof 2007. The increase in expenses incurred in the third quarter of 2008 wasprimarily due to higher costs incurred for the development of Nexavar inbreast cancer. Research and development expenses included $0.7 million ofemployee stock-based compensation for the third quarter of 2008 compared to$0.8 million for the third quarter of 2007.
In the third quarter of 2008, selling, general and administrative expenseswere $19.3 million, an increase of $4.1 million over the third quarter of2007. The increase in selling, general and administrative expenses wasprimarily due to increased employee-related expenses to support Nexavar.Selling, general and administrative expenses included $3.6 million of employeestock-based compensation in the third quarter of 2008 compared to $2.9 millionfor the third quarter of 2007.
Cash, Cash Equivalents and Marketable Securities
At September 30, 2008, the company had cash, cash equivalents, and currentand noncurrent marketable securities of $488.2 million compared to $469.7million at December 31, 2007. This increase was primarily due to cashprovided by operations.
Nine-Month Results
For the nine months ended September 30, 2008, Onyx recorded net income of$32.1 million, or $0.57 per diluted share, compared with a net loss of $22.5million, or $0.45 per diluted share, for the same period in 2007. Nexavar netsales, as recorded by Bayer, were $501.3 million and $246.8 million for thenine months ended September 30, 2008 and 2007, respectively. Excludingemployee stock-based compensation expense, non-GAAP net income for the ninemonths ended September 30, 2008 was $45.9 million, or $0.81 per diluted share,compared to a non-GAAP net loss of $12.2 million, or $0.24 per diluted share,for the same period in 2007. A description of the non-GAAP calculations isprovided below in the accompanying Reconciliation of GAAP to Non-GAAP NetIncome.
New Presentation of Statement of Operations Beginning Next Quarter
In December 2007, the Financial Accounting Standards Board (FASB) ratifiedEmerging Issues Task Force (EITF) 07-1, "Accounting for CollaborativeArrangements". Onyx has elected to adopt this new accounting guidance as ofDecember 31, 2008. As a result, the company's Statement of Operations for theyear ending December 31, 2008 and prior periods will be reclassified toconform to this new guidance. This new presentation impacts theclassification of amounts included in specific line items, but has no overallimpact on net income (loss) or net income (loss) per share. Quarterlyfinancial data for 2007 and 2008 will be presented with the new presentationin Onyx's 2008 Form 10-K to be filed next year.
As a result of this new presentation, the Statement of Operations willinclude the line item "Revenue from Collaboration Agreement." This line itemwill consist of the company's share of the commercial profit generated fromthe collaboration with Bayer, the reimbursement of the company's sharedmarketing costs related to Nexavar and royalty revenue. Onyx's 50% share ofcollaboration research and development expenses will be included in theResearch and Development Expense line item.
Conference Call with Management Today
Onyx's management will host a teleconference and web cast to provide ageneral business overview and discuss third quarter 2008 financial results.The event will begin at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) onNovember 6, 2008. Interested parties may access a live web cast of thepresentation on our website at:
http://www.onyx-pharm.com/wt/page/event_calendar
or by dialing 847-413-3235 and using the passcode 22936749. A replay ofthe presentation will be available on the Onyx website or by dialing630-652-3044 and using the passcode 22936749 later in the day. The replaywill be available through December 5, 2008.
About Onyx Pharmaceuticals, Inc.
Onyx Pharmaceuticals, Inc. is a biopharmaceutical company committed toimproving the lives of people with cancer by changing the way cancer istreated(TM). The company, in collaboration with Bayer HealthCarePharmaceuticals, Inc., is developing and marketing Nexavar(R) (sorafenib)tablets, a small molecule drug. Nexavar is currently approved for thetreatment of liver cancer and advanced kidney cancer. Additionally, Nexavaris being investigated in several ongoing trials in non-small cell lung cancer,melanoma, breast cancer and other cancers. For more information about Onyx,visit the company's website at: http://www.onyx-pharm.com.
Nexavar(R) (sorafenib) tablets is a registered trademark of BayerHealthCare Pharmaceuticals Inc.
This news release contains "forward-looking statements" of Onyx within themeaning of the federal securities laws. These forward-looking statementsinclude without limitation, statements regarding sales trends and commercialactivities and the timing, progress and results of clinical development,regulatory filings and actions. These statements are subject to risks anduncertainties that could cause actual results and events to differ materiallyfrom those anticipated. Reference should be made to Onyx's Annual Report onForm 10-K for the year ended December 31, 2007, filed with the Securities andExchange Commission under the heading "Risk Factors" for a more detaileddescription of such factors, as well as the Company's subsequent quarterlyreports on Form 10-Q. Readers are cautioned not to place undue reliance onthese forward-looking statements that speak only as of the date of thisrelease. Onyx undertakes no obligation to update publicly any forward-lookingstatements to reflect new information, events, or circumstances after the dateof 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 Nine Months Ended September 30, September 30, ------------------ ------------------ 2008 2007 2008 2007 Net revenue from -------- ------- -------- -------- unconsolidated joint business $39,924 $17,635 $107,860 $28,131 Operating expenses: Research and development (1) 10,950 7,901 27,012 19,883 Selling, general and administrative (1) 19,319 15,245 58,985 44,140 -------- ------- -------- -------- Total operating expenses 30,269 23,146 85,997 64,023 Income (loss) from -------- ------- -------- -------- operations 9,655 (5,511) 21,863 (35,892) Investment income 2,763 6,066 10,696 13,427 -------- ------- -------- -------- Income (loss) before income taxes 12,418 555 32,559 (22,465) Provision for income taxes 175 - 424 - -------- ------- -------- -------- Net income (loss) $12,243 $555 $32,135 $(22,465) ======== ======= ======== ========= Net income (loss) per share: Basic $0.22 $0.01 $0.58 $(0.45) ======== ======= ======== ========= Diluted $0.21 $0.01 $0.57 $(0.45) ======== ======= ======== ========= Shares used in computing net income (loss) per share: Basic 56,197 54,836 55,755 49,817 ======== ======= ======== ========= Diluted 57,194 55,785 56,773 49,817 ======== ======== ======== ========= (1) Includes employee stock- based compensation charges of: Research and development $694 $785 $2,083 $2,046 Selling, general, and administrative 3,646 2,856 11,726 8,220 -------- ------- -------- -------- $4,340 $3,641 $13,809 $10,266 ======== ======== ======= ========== ONYX PHARMACEUTICALS, INC. CALCULATION OF NET REVENUE FROM UNCONSOLIDATED JOINT BUSINESS (In thousands, unaudited) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------ 2008 2007 2008 2007 -------- ------- -------- -------- Nexavar product revenue, net (as recorded by Bayer) $180,887 $104,605 $501,303 $246,817 ======== ======== ======== ========== Revenue subject to profit sharing (as recorded by Bayer) $168,141 $104,605 $476,584 $246,817 Combined cost of goods sold, distributed, selling, general and administrative expenses 79,362 55,950 222,200 141,684 Combined research and development expenses 41,855 37,561 123,279 105,707 Combined collaboration profit -------- ------- -------- -------- (loss) $46,924 $11,094 $131,105 $(574) ======== ======== ======== ========== Onyx's share of collaboration profit (loss) $23,462 $5,547 $65,553 $(287) Reimbursement of Onyx's direct development and marketing expenses 15,570 12,088 40,577 28,418 Royalty revenue 892 - 1,730 - Onyx net revenue from -------- ------- -------- -------- unconsolidated joint business $39,924 $17,635 $107,860 $28,131 ======== ======== ======== ========== ONYX PHARMACEUTICALS, INC. CONDENSED BALANCE SHEETS (In thousands) Sep. 30, Dec. 31, 2008 2007 (unaudited) (2) Assets ----------- --------- Cash, cash equivalents and marketable securities $446,522 $469,650 Other current assets 48,188 11,006 ----------- --------- Total current assets 494,710 480,656 Property and equipment, net 2,679 3,146 Marketable securities, non-current 41,690 - Other assets 341 281 ----------- --------- Total assets $539,420 $484,083 Liabilities and stockholders' equity =========== ========= Current liabilities 23,524 11,441 Advance from collaboration partner, non-current 16,633 39,234 Other long-term liabilities 1,176 1,171 Stockholders' equity 498,087 432,237 Total liabilities and stockholders' ----------- --------- equity $539,420 $484,083 =========== ========= (2) Derived from the audited financial statements included in the Company's Annual Report on Form 10-K for the year-ended December 31, 2007. ONYX PHARMACEUTICALS, INC. RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (In thousands, except per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, -------------------------------------- 2008 2007 2008 2007 ---------- -------- -------- --------- GAAP net income (loss) $12,243 $555 $32,135 $(22,465) Non-GAAP adjustments: Employee stock-based compensation under FAS 123R 4,340 3,641 13,809 10,266 ---------- -------- -------- --------- Non-GAAP net income (loss) (3) $16,583 $4,196 $45,944 $(12,199) ========== ======== ======== ========= GAAP diluted net income (loss) per share $0.21 $0.01 $0.57 $(0.45) Non-GAAP adjustments: Employee stock-based compensation under FAS 123R 0.08 0.07 0.24 0.21 Non-GAAP diluted net income (loss) ---------- -------- -------- --------- per share (3) $0.29 $0.08 $0.81 $(0.24) =========== ======== ======== ========= Diluted shares 57,194 55,785 56,773 49,817 (3) This press release includes the following non-GAAP financial measures: non-GAAP net income (loss) and non-GAAP diluted net income (loss) per share, both of which exclude the impact of employee stock-based compensation expense. The foregoing table reconciles these non-GAAP measures to the most comparable financial measures calculated in accordance with GAAP. Our 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. Our 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 our operating results to our peer companies. Our 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 our business. These non-GAAP measures have limitations, however, because they do not include all items of income and expense that affect Onyx. The non-GAAP financial measures we use are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP.
SOURCE Onyx Pharmaceuticals, Inc.
