EMERYVILLE, Calif., Nov. 3, 2010 /PRNewswire-FirstCall/ -- Onyx Pharmaceuticals, Inc. (Nasdaq: ONXX) today reported its financial results for the third quarter 2010. Onyx reported non-GAAP net income of $55.3 million, or $0.84 per diluted share, for the third quarter 2010 compared to non-GAAP net income of $22.2 million, or $0.35 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 net income of $41.5 million, or $0.66 per diluted share, for the third quarter 2010 compared to net income of $8.2 million, or $0.14 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)."
"In the quarter, we were pleased to announce our partnership with Ono Pharmaceutical Co., Ltd., which will accelerate the development of carfilzomib in Japan," said Matthew K. Fust., executive vice president and Onyx's chief financial officer. "Innovative corporate development transactions such as this one, in combination with our successful Nexavar business, provide Onyx with the resources to execute on our strategic priorities. In the near term, we expect to build a franchise opportunity in the multiple myeloma market with carfilzomib and ONX 0912, our next-generation proteasome inhibitor and first-generation oral proteasome inhibitor, respectively. Importantly, we are also generating additional data for potential new indications for Nexavar as well as expanding its use in approved indications."
Operating RevenueGlobal Nexavar net sales as reported by Onyx's collaborator Bayer HealthCare Pharmaceuticals Inc., or Bayer, were $226.2 million for the third quarter 2010 compared to $229.2 million in the same period 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 90 countries worldwide.
For the third quarter 2010, Onyx reported total operating revenue of $122.9 million compared to $69.1 million for the same period in 2009. Total operating revenue is comprised of revenue from the exclusive license agreement entered into with Ono Pharmaceutical Co., Ltd., or Ono, and revenue from the Nexavar collaboration agreement. Onyx recorded license revenue of $59.2 million in the third quarter 2010, reflecting a fee earned as a part of the consideration under the September 2010 agreement with Ono. Revenue from the Nexavar collaboration agreement was $63.7 million in the third quarter 2010 compared to $69.1 million for the same period in 2009. The decrease in revenue from the Nexavar collaboration agreement between periods resulted from lower global net sales of Nexavar and a slight increase in combined Nexavar commercial expenses.
Operating ExpensesOnyx recorded research and development expenses of $44.6 million in the third quarter 2010, compared to $35.6 million for the same period in 2009. Higher research and development expenses in the third quarter 2010 were primarily due to investments to develop carfilzomib and ONX 0912, which were partially offset by the reimbursement received from Ono for the global development of carfilzomib and ONX 0912, and by lower expenses for the ONX 0801 investment compared to the third quarter 2009, when a milestone payment of $7.0 million was made to BTG International Limited.
Selling, general and administrative expenses were $25.9 million in the third quarter 2010, compared to $23.4 million for the same period in 2009. Higher selling, general and administrative expenses 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 $5.6 million of non-cash expense in the third quarter 2010 associated with the increase in the fair value of the liability for contingent consideration that is recorded for the potential milestone payments from the Proteolix acquisition. The increase in the fair value is due to the passage of time.
Interest ExpenseInterest expense of $4.9 million for the third quarter 2010 primarily relates to the 4.0% convertible senior notes due 2016 issued in August 2009 and includes non-cash imputed interest expense of $2.3 million as a result of the application of ASC 470-20.
Cash, Cash Equivalents and Marketable SecuritiesAt September 30, 2010, cash, cash equivalents, and current and non-current marketable securities were $588.0 million, compared to $587.3 million at December 31, 2009. This excludes restricted cash of $31.9 million and $27.6 million at September 30, 2010 and December 31, 2009, respectively.
Nine-Month ResultsNon-GAAP net income for the nine months ended September 30, 2010 was $56.6 million, or $0.90 per diluted share, compared to non-GAAP net income of $45.6 million, or $0.73 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, employee stock-based compensation expense and non-cash imputed interest expense related to the application of ASC 470-20. A description of the non-GAAP calculations is provided below in the accompanying table entitled "Reconciliation of GAAP to Non-GAAP Net Income (Loss)." For the nine months ended September 30, 2010, on a GAAP basis Onyx recorded a net loss of $67.7 million, or $1.08 per diluted share, compared with a net income of $21.7 million, or $0.37 per diluted share, for the same period in 2009.
Management Conference Call TodayOnyx 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 November 3, 2010. 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 28272610#. A replay of the presentation will be available on the Onyx website or by dialing 630-652-3042 and using the passcode 28272610# approximately one hour after the teleconference concludes. The replay will be available through November 17, 2010.
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, and the potential expansion of Onyx's product portfolio. 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; competition; failures or delays in our clinical trials; dependence on our collaborative relationship with Bayer; 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; 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; product liability risks; and the anticipated benefits of the acquisition of Proteolix. Reference should be made to Onyx's Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission, under the heading "Risk Factors" for a more detailed description of these and other risks, as well as the company's subsequent quarterly report on Form 10-Q. 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.)ONYX PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share amounts)
(unaudited)Three Months EndedNine Months EndedSeptember 30,September 30,2010200920102009Revenue: Revenue from collaboration agreement$
9,137$ 195,372$ 183,074License revenue59,165-59,165-Total operating revenue122,86169,137254,537183,074Operating expenses:Research and development (1)44,56835,635131,39492,478Selling, general and administrative (1)25,92423,44077,29368,899Contingent consideration5,622-101,107-Total operating expenses76,11459,075309,794161,377Income (loss) from operations46,74710,062(55,257)21,697Investment income6281,0152,1983,108Interest expense (4,943)(2,255)(14,467)(2,255)Other expense(862)-(862)-Income (loss) before provision (benefit) for income taxes41,5708,822(68,388)22,550Provision (benefit) for income taxes70589(662)878Net income (loss)$
21,672Net income (loss) per share:Basic$
.37Computation of diluted shares:Basic 62,70760,24862,56258,201Dilutive effect of options142376-310Diluted (2)62,84960,62462,56258,511(1) Includes employee stock-based compensation charges of:Research and development$
2,286Selling, general, and administrative4,7994,45513,50212,647Total employee stock-based compensation$
4,933(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 and nine months ended September 30, 2010 and 2009 because their effect would be anti-dilutive.ONYX PHARMACEUTICALS, INC.
CALCULATION OF REVENUE FROM COLLABORATION AGREEMENT(In thousands, unaudited)Three Months EndedNine Months EndedSeptember 30, September 30, 2010200920102009Nexavar product revenue, net (as recorded by Bayer)$ 226,181$ 229,243$ 676,665$ 608,295Nexavar revenue subject to profit sharing (as recorded by Bayer)$ 191,553$ 199,774$ 580,399$ 548,093Combined cost of goods sold, distribution, selling, general and administrative expenses78,46476,309237,184222,531Combined collaboration commercial profit$ 113,089$ 123,465$ 343,215$ 325,562Onyx's share of collaboration commercial profit$ 56,545$ 61,732$ 171,607$ 162,781Reimbursement of Onyx's shared marketing expenses4,7275,34217,02616,079Royalty revenue2,4242,0636,7394,214Revenue from collaboration agreement$ 63,696$ 69,137$ 195,372$ 183,074ONYX PHARMACEUTICALS, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS)(In thousands, except per share amounts)
(unaudited)Three Months EndedNine Months EndedSeptember 30, September 30, 2010200920102009GAAP net income (loss)
21,672Non-GAAP adjustments:Contingent consideration
5,622-101,107-Employee stock-based compensation
5,8744,97216,59214,933Imputed interest related to the convertible senior notes due 2016
2,2921,0276,6711,027Acquisition related transaction costs
-7,000-7,000Non-GAAP net income (3)$
45,643Computation of non-GAAP diluted net income (loss)Non-GAAP net income (3)$
45,643Add:Interest and issuance costs related to dilutive convertible senior notes (4)2,5321,228-1,228Non-GAAP net income - diluted (3)$
46,871Computation of non-GAAP diluted sharesBasic shares
62,70760,24862,56258,201Dilutive effect of options
142376186310Dilutive effect of convertible senior notes (4)5,8015,801-5,801Non-GAAP diluted shares (3)68,65066,42562,74864,312Non-GAAP net income per share (3)$
.78Non-GAAP net income per share - diluted (3) $
.73(3) This press release includes the following non-GAAP financial measures: non-GAAP net income, non-GAAP net income – diluted, non-GAAP net income per share, and non-GAAP net income 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:Contingent consideration expense: The effects of contingent consideration expense are excluded due to the nature of this charge, which is related to the change in fair value of the liability for contingent consideration in connection with the acquisition of Proteolix; such exclusion facilitates comparisons of Onyx's operating results to peer companies.Employee stock-based compensation: The effects of employee stock-based compensation are excluded because of varying available valuation methodologies, subjective assumptions and the variety of award types; such exclusion facilitates comparisons of Onyx's operating results to peer companies.Imputed interest related to the convertible senior notes due 2016: The effects of imputed interest related to the convertible senior notes due 2016 are excluded because this expense is non-cash; such exclusion facilitates comparisons of Onyx's cash operating results to peer companies.Milestone payments and acquisition related transaction costs: The effects of milestone payments and acquisition related transaction costs are excluded because they do not relate to the normal and recurring transactions of Onyx's business; such exclusions allow for a better representation of the ongoing economics of the business, facilitates comparison to peer companies and is reflective of how Onyx management internally manages the business.(4)Under the "if-converted" method, interest and issuance costs and potential common shares related to the Company's convertible senior notes were excluded in non-GAAP diluted per share amounts for the nine months ended September 30, 2010 because their effect would be anti-dilutive.ONYX PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)September 30,December 31,20102009(unaudited)(5)AssetsCash, cash equivalents and current marketable securities
550,108Other current assets
89,42388,615Total current assets
645,897638,723Marketable securities, non-current
31,55537,174Property and equipment, net
6,1907,473Intangible assets - in-process research and development
,324,680Liabilities and stockholders' equityCurrent liabilities
7,778Convertible senior notes due 2016
150,340143,669Liability for contingent consideration, non-current
261,635160,528Deferred tax liability
157,090157,090Other long-term liabilities
705,685750,556Total liabilities and stockholders’ equity
,324,680(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.|
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