Non-GAAP Net Income of $2.9 Million and EPS of $0.05
Emeryville, CA. — Aug. 04, 2010
Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) today reported its financial results for the second quarter 2010. Global Nexavar net sales as reported by Onyx’s collaborator Bayer HealthCare Pharmaceuticals Inc., or Bayer, were $236.1 million for the second quarter 2010, a 17% increase compared to $201.0 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.
Onyx reported non-GAAP net income of $2.9 million, or $0.05 per diluted share, for the second quarter 2010 compared to non-GAAP net income of $15.3 million, or $0.27 per diluted share, for the same period in 2009. Non-GAAP net income excludes 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”) Subtopic 470-20. Non-GAAP net income for the second quarter 2010 reflected an increase in the commercial profit from the Nexavar collaboration, offset by an increase in research and development expenses primarily due to the development efforts for carfilzomib, and by interest expense on the convertible senior notes issued in August 2009.
On a GAAP basis, Onyx reported a net loss of $97.2 million, or $1.55 per diluted share, for the second quarter 2010 compared to net income of $9.4 million, or $0.16 per diluted share, in the same period in 2009. The GAAP net loss for the second quarter 2010 includes an increase in the non-cash contingent consideration expense based on recent positive carfilzomib data. The change is associated with an increased probability of making the earn-out payments related to the Proteolix acquisition. 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).”
“With year-over-year Nexavar net sales growth of 17% and healthy quarter-over-quarter growth, our commercially successful business is delivering cash flow and driving the strategic flexibility to maximize our rapidly advancing pipeline,” said N. Anthony Coles, M.D., president and chief executive officer of Onyx. “The strategy to expand our portfolio has proven successful with the recently announced impressive top-line data for carfilzomib. These exciting data have the potential to transform Onyx into a multi-product revenue-driven company with the opportunity to benefit even greater numbers of patients.”
Revenue from Collaboration Agreement
For the second quarter 2010, Onyx reported revenue from its Nexavar collaboration agreement of $68.8 million compared to $60.2 million for the same period in 2009. The increase in revenue from collaboration agreement between periods resulted from higher global net sales of Nexavar.
Onyx recorded research and development expenses of $43.3 million in the second quarter 2010, compared to $28.0 million for the same period in 2009. Higher research and development expenses in the second quarter 2010 were primarily due to planned investments to develop carfilzomib. Selling, general and administrative expenses were $26.6 million in the second quarter 2010, compared to $23.5 million for the same period in 2009. Higher selling, general and administrative expenses were primarily due to the timing of shared advertising and promotional costs related to Nexavar incurred by Onyx and due to planned expense increases as a result of the acquisition of Proteolix.
Contingent Consideration Expense
Onyx recorded $92.0 million of non-cash expense in the second quarter 2010 associated with the increase in the fair value of the liability for the potential earn-out payments related to the Proteolix acquisition. The increase in the fair value of the liability consisted of $88.5 million due to an increase in the probability of success and $3.5 million due to the passage of time. The increased probability of success reflects positive preliminary results from the 003-A1 trial, a Phase 2b study of carfilzomib, and the PX-171-006 trial, a Phase 1b study of carfilzomib plus lenalidomide and low-dose dexamethasone, both of which were in patients with relapsed and refractory multiple myeloma.
Interest expense of $4.8 million for the second 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 $2.2 million as a result of the application of ASC Subtopic 470-20.
Cash, Cash Equivalents and Marketable Securities
On June 30, 2010, cash, cash equivalents, and current and non-current marketable securities were $527.0 million, compared to $587.3 million at December 31, 2009. This excludes restricted cash of $31.6 million and $27.6 million at June 30, 2021 and December 31, 2009, respectively. The decrease is primarily due to a $40.0 million earn-out payment made to former Proteolix stockholders as a result of the achievement of a development milestone and a $20.0 million pre-payment to S*BIO Pte Ltd for research and development expenses related to ONX 0803 and ONX 0805.
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, 2021 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.Return to 2010 Press Releases