Non-GAAP Net Income of $22 Million, 34% Increase Over Third Quarter 2008
Emeryville, CA. — Nov. 03, 2009
Onyx Pharmaceuticals, Inc. (NASDAQ: ONXX) today reported its financial results for the third quarter 2009. Global Nexavar net sales as reported by Onyx’s collaborator Bayer HealthCare Pharmaceuticals, or Bayer, were $229.2 million for the third quarter 2009, a 27% increase compared to $180.9 million in the same period in 2008. Onyx and Bayer are marketing and developing Nexavar® (sorafenib) tablets, an anticancer therapy currently approved for the treatment of liver cancer and advanced kidney cancer in the U.S., European Union, Japan and other territories.
Onyx reported non-GAAP net income of $22.2 million, or $0.35 per diluted share, for the third quarter 2009 compared to non-GAAP net income of $16.6 million, or $0.29 per diluted share, for the same period in 2008. Non-GAAP net income excludes employee stock-based compensation expense, non-cash imputed interest expense related to the application of Accounting Standards Codification (“ASC”) Subtopic 470-20 (formerly known as Financial Accounting Standards Board Staff Position, or FSP APB, 14-1), acquisition related transaction costs and a payment to BTG International Limited in connection with the achievement of a development milestone in the ONX 0801 program. Net income for the third quarter 2009 reflected growth in Nexavar sales and lower Nexavar commercial expenses, offset by expanded clinical development efforts, lower investment income and interest expense on the convertible senior notes issued in August 2009. On a GAAP basis, Onyx reported net income of $8.2 million, or $0.14 per diluted share, for the third quarter 2009 compared to net income of $12.2 million, or $0.21 per diluted share, in the same period in 2008. 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.”
“Delivering another quarter of strong financial performance points to our success in building Nexavar as an oncology blockbuster and demonstrates our commitment to executing on our strategic priorities,” said N. Anthony Coles, M.D., president and chief executive officer of Onyx. “As the next step in our plans to grow the company strategically, we recently announced our intention to acquire Proteolix Inc., a leader in the science of proteasome inhibition. Through continued investigation of Nexavar in a broad array of additional tumor types and investment in a growing number of pipeline candidates, we are creating multiple opportunities for additional value creation.”
Revenue from Collaboration Agreement
For the third quarter 2009, Onyx reported revenue from its Nexavar collaboration agreement of $69.1 million compared to $50.8 million for the same period in 2008. The 36% increase in revenue from collaboration agreement between periods resulted from an increase in Nexavar sales and royalty revenue and a decrease in Nexavar commercial expenses.
Onyx recorded research and development expenses of $35.6 million in the third quarter 2009, compared to $21.8 million for the same period in 2008. Higher research and development expenses in the third quarter 2009 were primarily due to planned increases in the development program for Nexavar across additional tumor types, such as thyroid, colorectal and adjuvant liver cancer and Onyx’s costs to further develop ONX 0801, including a milestone payment of $7.0 million to BTG International Limited. Selling, general and administrative expenses were $23.4 million in the third quarter 2009, compared to $19.3 million for the same period in 2008. Higher selling, general and administrative expenses were primarily due to headcount-related expenses to support Onyx’s growth.
Investment income was $1.0 million for the third quarter 2009 compared to $2.8 million in the same period in 2008. The decrease was primarily due to lower effective interest rates as a result of market conditions as well as a change in the asset allocation of Onyx’s investment portfolio.
Interest expense of $2.3 million for the third quarter 2009 relates to the 4.0% convertible senior notes due 2016 issued in August 2009, and includes non-cash imputed interest expense of $1.0 million as a result of the application of ASC Subtopic 470-20 (formerly known as FSP APB 14-1).
At September 30, 2009, cash, cash equivalents, and current and noncurrent marketable securities were $843.1 million, compared to $458.0 million at December 31, 2008. This increase was primarily due to net proceeds of debt and equity financings in August 2009 and cash generated from operations.
Nexavar net sales, as recorded by Bayer, were $608.3 million and $501.3 million for the nine months ended September 30, 2021 and 2008, respectively. Non-GAAP net income for the nine months ended September 30, 2021 was $45.6 million, or $0.73 per diluted share, compared to non-GAAP net income of $45.9 million, or $0.81 per diluted share for the same period in 2008, excluding employee stock-based compensation expense, non-cash imputed interest expense related to the application of ASC Subtopic 470-20 (formerly known as FSP APB 14-1), acquisition related transaction costs and a payment to BTG International Limited in connection with the achievement of a development milestone in the ONX 0801 program. A description of the non-GAAP calculations is provided below in the accompanying table entitled “Reconciliation of GAAP to Non-GAAP Net Income.” For the nine months ended September 30, 2009, on a GAAP basis Onyx recorded net income of $21.7 million, or $0.37 per diluted share, compared with a net income of $32.1 million, or $0.57 per diluted share, for the same period in 2008.
Management Conference Call Today
Onyx 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, 2009. The live webcast will be available at:
or by dialing 847-619-6547 and using the passcode 25674242. A replay of the presentation will be available on the Onyx website or by dialing 630-652-3044 and using the passcode 25674242 approximately one hour after the teleconference concludes. The replay will be available through December 3, 2009.
Onyx Pharmaceuticals, Inc. is a biopharmaceutical company committed to improving the lives of people with cancer. The company, in collaboration with Bayer HealthCare Pharmaceuticals, is developing and marketing Nexavar® (sorafenib) tablets, a small molecule drug. Nexavar 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. For more information about Onyx, visit http://www.onyx-pharm.com.
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, regulatory filings and actions and Onyx’s anticipated acquisition of Proteolix, Inc. and its lead product candidate, carfilzomib. 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 consummation and anticipated benefits of the proposed acquisition of Proteolix. Reference should be made to Onyx’s Annual Report on Form 10-K for the year ended December 31, 2008, 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 reports 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.