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newratings.com  Jun 20  Comment 
THOUSAND OAKS (dpa-AFX) - Bayer HealthCare (BAYZF.PK, BAYRY.PK, BYR.L) announced that the Ministry of Health, Labor and Welfare in Japan has approved the oral multi-kinase inhibitor Nexavar (sorafenib) for the treatment of patients with...
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Amgen CEO Robert Bradway nabbed Onyx Pharmaceuticals for $10.4 billion last summer, but that wasn't enough to net him the kind of deal-related bonus some of his peers enjoy. But his take-home increased over last year's haul, which was enough to...
FiercePharma  Mar 28  Comment 
Chalk up a win for Bayer KGaA in its running battle in India over a compulsory license granted to Natco to produce a cheap knock-off of its cancer drug Nexavar. The drug is being sold in India but a high court there says that is as far as the...
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Benzinga  Mar 11  Comment 
Bayer HealthCare Pharmaceuticals (OTC: BAYRY) and Onyx Pharmaceuticals, Inc., an Amgen subsidiary (Nasdaq: AMGN), today announced that a Phase 3 trial evaluating the investigational use of NEXAVAR® (sorafenib) tablets as an adjuvant treatment for...




 
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Onyx Pharmaceuticals, Inc. (ONXX) is engaged in the development of novel cancer therapies that target the molecular basis of cancer. With its collaborator Bayer Healthcare, the company is developing a small molecule drug Nexavar (sorafenib). Nexavar is an oral small molecule RAF kinase inhibitor candidate. RAF kinase is a signaling protein involved in the regulation of the VEGF (vascular endothelial growth factor) and PDGF (platelet derived growth factor), two important molecules that play a key role in angiogenesis (the formation of a blood vessel). In order to grow, tumor cells must establish and cause proliferation of new blood vessels that supply nutrients and oxygen. Onyx and Bayer have previously demonstrated that Nexavar has both anti-proliferation and anti-angiogenesis characteristics. The companies are splitting the development cost and profits 50/50 for Nexavar worldwide except for Japan. Bayer will pay a percentage of royalty to Onyx on Japan sales. Nexavar has potential in a number of cancer indications. Approval for renal cell carcinoma (RCC) in the US came in late December 2005. On July 24, 2006, Nexavar was approved in Europe for RCC. Meanwhile, the company is filing Nexavar for liver cancer around the world. On October 30, 2007, EC approved Nexavar for the 1st line treatment of liver cancer and the FDA approved Nexavar for liver cancer in November 2007. Other potential indications are non-small cell lung cancer (phase III), breast cancer (phase II), and in combination therapy with chemotherapy agents. Bayer will manufacture the drug.

In 2005, the company booked $1.0 million in revenue from a payment received from Shanghai Sunway Biotech Co., Ltd. for exclusive rights to the p53-selective virus, ONYX-015. Onyx will also receive future milestone payments from its partners on clinical development and registration of resulting products apart from royalties on worldwide sales. In the third quarter of 2006 the company booked $0.1 million for licensing certain Onyx patents from the now discontinued therapeutic virus program.

Onyx was founded in 1992 and is headquartered in Emeryville, California.

INVESTMENT THESIS

Nexavar (sorafenib) is doing fine so far notwithstanding heavy competition in kidney cancer

Nexavar was approved by the FDA on December 20, 2005 for the treatment of advanced Renal Cell Carcinoma (RCC), also called kidney cancer. Nexavar was approved in Europe on July 24, 2006. Analysis of an ongoing phase III (n=900) trial presented in early November 2005 at the thirteenth European Cancer Conference (ECCO) demonstrated an estimated 39% improvement in survival for patients receiving Nexavar with advanced RCC versus those receiving placebo (p=0.018, hazard ratio 0.72). Onyx and Bayer management then transitioned about 50% of the placebo patients to Nexavar on ethical considerations. This allowed for another mid-term survival analysis at the American Society of Clinical Oncology (ASCO) meeting in June 2006. This data demonstrated that patients on Nexavar achieved an overall mean survival time of 19.3 months vs. 15.9 months for placebo. This was a 21% improvement (p=0.015). Patients taking Nexavar demonstrated progression free survival (PFS) of 5.5 months compared to only 2.8 months on placebo.

Nexavar US sales were $41 million in third quarter of 2007, up 44.4% compared to $28.4 million in third quarter of 2006. Nexavar sales from ex-US were $63.6 million in third quarter of 2007, up 29% compared to the $49.3 million in second quarter of 2007. Total Nexavar sales in the third quarter of 2007 were $104.6 million, up 28.7% compared to the $81.3 million in sales in the second quarter of 2007. In fiscal year 2007, we estimate total US sales of $149 million, up 30% compared to $$114.3 million in fiscal 2006. Rest of the world sales will reach $223 million in 2007 which is not comparable to 2006 numbers.

We are impressed by the financial performance of Nexavar especially when we consider the fierce competition in the kidney cancer market. In late January 2006 Pfizer received final approval for Sutent in both advanced RCC and gastro-intestinal stromal tumors (GIST). Also in early Feb 2007, Sutent was approved for first line advanced kidney cancer. Further, on May 31, 2007, FDA approved Wyeth's new drug Torisel (temsirolimus) for the treatment of renal cell carcinoma. We believe growth will mainly come from international sales for kidney cancer going forward.

As we expected, Onyx achieved profitability from the joint venture in first quarter of 2007 with a net profit of $3 million. In the third quarter, Onyx booked $17.6 million in revenue from the JV with Bayer which is way higher than our estimate of $9.5 million. We believe the drug is currently being used in first, second, and third-line indications, although management hesitated on giving market share or penetration rates. It looks like use is coming as a single-agent and in combination with chemotherapy or other targeted molecules.

The companies are splitting the development cost for Nexavar and will split profits 50/50 except for Japan. Bayer will pay a percentage of royalty to Onyx on Japan sales. As we expected, Nexavar turned profitable to Onyx in the first quarter of 2007 with a net profit of $3 million. Once profitable, Onyx will book the payment as revenues from Bayer. Before the profitability, Onyx booked the unconsolidated loss from the joint venture below the revenue line with operating expenses. We see peak sales in the advanced RCC setting at $500 million.

Expanding the label is key to achieving strong profitability for Onyx. The company and Bayer are testing Nexavar in various other cancer indications either as a single agent or in combination with other chemotherapy.

Sales from liver cancer will make a meaningful contribution to top line growth in 2008 and beyond

The Company completed a phase III (SHARP) trial of Nexavar on advanced Liver Cancer or Hepatocellular Carcinoma (HCC) in Feb 2007. The HCC trial completed enrollment of 602 patients tested on Nexavar as s single-agent. The phase III trial will look for overall survival and time-to-progression. On February 12, 2007, an independent data monitoring committee (DMC) reviewed and analyzed the interim safety and efficacy data from the pivotal phase III and concluded that the trial met its primary endpoint resulting in superior overall survival (OS) in those patients receiving Nexavar tablets versus those patients receiving placebo. The DMC also noted that there was no demonstrated difference in serious adverse event rates between the two treatment arms (Nexavar and placebo). Based on these conclusions, the DMC recommended that the trial be stopped earlier. As a result of this recommendation, Bayer and Onyx stopped the trial and allow all patients enrolled in this trial access to Nexavar.

On June 4, 2007, Bayer and Onyx presented the phase III data at ASCO meeting. Nexavar significantly extended overall survival in patients with HCC versus those taking placebo by 44% (HR=0.69 p-value=0.0006). The international, phase III, placebo-controlled SHARP trial randomized and evaluated 602 liver cancer patients who had no prior systemic therapy at sites in the Americas, Europe, and Australia/New Zealand. The primary objective of the study was to compare overall survival in patients administered Nexavar versus those administered placebo. Median overall survival was 10.7 months in Nexavar-treated patients compared to 7.9 months in those taking placebo. In a key secondary endpoint of the study, Nexavar patients reported a median time-to-disease progression of 5.5 months, compared with 2.8 months for patients on placebo. This result was also highly statistically significant. There were no significant differences in serious adverse event rates between the Nexavar and placebo-treated groups, with the most commonly observed serious adverse events in patients receiving Nexavar being diarrhea and hand-foot-skin reaction. The companies are also planning a company- sponsored phase III study of Nexavar in the adjuvant treatment of HCC following the complete removal of early stage liver cancer.

Based on the strength of the data, the companies submitted a market authorization application (MAA) to European Medicines Agency (EMEA) for the approval to market Nexavar tablets within the European Union for the treatment of hepatocellular carcinoma (HCC) in mid June 2007. In late June 2007, the two companies filed a Supplemental New Drug Application (sNDA) for Nexavar tablets to the FDA for the treatment of patients with hepatocellular carcinoma (HCC). The European Committee for Medicinal Products for Human Use (CHMP) has issued a positive opinion, recommending to grant marketing authorization for Nexavar in September 2007. Based on the positive opinion, the EC granted marketing authorization to Nexavar tablets for the treatment of patients with liver cancer on October 30, 2007. The US FDA approved Nexavar for liver cancer on November 19, 2007. Additional regulatory filings for HCC are under review in countries around the world including China and Japan. Bayer Healthcare and Onyx initiated an innovative patient support program - Resources for Expert Assistance and Care Helpline (REACH ) immediately after the FDA approval of Nexavar for liver cancer to answer questions about Nexavar treatment, reimbursement, and patient support.

Because currently there are no therapies that significantly improve survival for patients with liver cancer, Nexavar could be the new reference standard of care for the first-line treatment of HCC and will capture the major market share for liver cancer. We believe that from 2008 sales from liver cancer will contribute significantly to Nexavar total sales.

Liver cancer is responsible for about 90 percent of the primary malignant liver tumors in adults. It is the fifth most common cancer in the world. According to the American Cancer Society, there are nearly 19, 000 new cases of liver cancer in the US. Estimated death each year is 16,780. In Europe, the incident rate of liver cancer is higher than that found in the U.S. The rest-of-world opportunity for Nexavar in liver cancer, especially in China which has a very high incident rate of liver cancer, is also significant. Over 600,000 new cases of HCC are diagnosed globally each year. We model US peak sales for liver cancer at about $150 million. EU peak sales could reach $300 million.

Further label expansion of Nexavar into other cancer indications is under way

The company is also progressing with a large (n=900) phase III trial in first-line Non-Small Cell Lung Cancer (NSCL) alone. The primary endpoint of this trial will be overall survival (OS), with secondary endpoints of progression free survival (PFS) and response rate (RR). Final results will be available in mid-2008. Combination studies with Genentech's Avastin in NSCLC are also underway. Avastin is not used in squamous cell carcinoma, so the ability of Nexavar to offer an additive benefit in either adenocarcinoma or squamous cell could significantly add to our forecasts. The NSCLC trials will be conducted under an FDA Special Protocol Assessment (SPA). In early May 2005 the FDA accepted Nexavar into its Pilot-1 program for continuous marketing applications. This should work to speed the rolling NDAs for these other indications.

Onyx is testing Nexavar for Melanoma in a couple of clinical trials. One of them is PRISM. The PRISM study (n=250) is a second-line progress-free-survival (PFS) phase III trial studying Nexavar plus chemotherapy agents carboplatin / paclitaxel. Unfortunately, the company announced on December 4, 2006 that the PRISM study did not meet its primary endpoint. The results from the drug arm and control arm are comparable and details of the trial were not available and will be presented at upcoming scientific meeting according to the management in the conference call. Future development of Nexavar for melanoma will be dependent on other clinical trials for melanoma while management indicated in the conference call that the company will increase its attention to the more common malignancies in which anti-angiogenics have demonstrated activity.

Another phase III trial of Nexavar for melanoma is the Eastern Cooperative Oncology Group (ECOG). ECOG trial is a NIH sponsored phase III trial which is expected to enroll roughly 800 chemotherapy na ve patients (first line treatment) studying Nexavar plus carboplatin / paclitaxel verse carboplatin / paclitaxel alone. The primary endpoint is overall survival of Nexavar compared to the control arm. The ECOG will continue to complete the enrollment. Other clinical trials for melanoma include fist-line, phase II trial studying Nexavar plus DTIC vs DTIC alone in disease progress and phase II trial studying Nexavar plus temozolomide vs temozolomide alone in multiple lines.

Melanoma accounts for about four percent of skin cancer cases but causes about 79% of skin cancer deaths. In 2002, about 160,000 people worldwide (about 53,000 Americans) were diagnosed with melanoma and more than 40,000 of them (about 7,500 Americans) died from the disease. In the U.S. the percentage of people who develop melanoma has more than doubled in the past 20 years.

Bayer and Onyx are also conducting various clinical trials for various cancer types in order to further expand Nexavar labels.

Financial Position is very strong

As of September 30, 2007, the company had cash, cash equivalents and marketable securities of $451 million. The company had no long term debt at the end of this quarter. Strong balance sheet will allow Onyx to be able to concentrate on its long term growth strategy.




References

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