Onyx Pharma Aims To Boost Nexavar Sales, Develop Drug Pipeline

After closing a recent acquisition, Onyx Pharmaceuticals Inc. (ONXX) is shifting its focus inward as it looks to expand sales of cancer drug Nexavar and develop its newly increased pipeline that may produce a second cancer treatment in 2011.

Nexavar, sold with Germany's Bayer AG (BAYRY, BAYN.XE) since 2005, is approved to treat liver cancer and advanced kidney cancer, and growth has been strong--global sales rose 27% to $229 million in the third quarter and are expected to exceed $1 billion in 2010.

The Emeryville, Calif., biopharmaceutical company said Wednesday it expects to maintain Nexavar's growth by increasing its presence overseas, specifically in China, as well as adding other types of cancer to its label. As it looks beyond Nexavar, Onyx is concentrating on developing recently acquired products and isn't as focused on searching for new deals.

"We don't have the need to be aggressive. It was a very different case a year ago when the company was really just about Nexavar," Chief Executive Tony Coles said in an interview Wednesday. "We've now created multiple potential revenue streams ... and now we have to focus on executing."

Shares of Onyx, recently at $29, have risen 15% since late October. Coles is meeting with Wall Street analysts Thursday to review recent scientific data for Nexavar and its pipeline.

The company has a lot on its plate, with eight compounds in its pipeline, most from its recently closed acquisition of Proteolix Inc., which brought in carfilzomib.

Onyx expects to file next year for carfilzomib's approval to treat advanced multiple myeloma, a type of blood cancer, and expand its use into earlier phases of the disease.

"Across those two indications we expect about $1 billion in sales from carfilzomib, should the data bear out," Coles said.

In the meantime, Onyx is focused on increasing Nexavar's presence in Asia, specifically in the huge China market. Coles estimates that there are 620,000 new cases of liver cancer every year worldwide, with more than 340,000 of those occurring in China. That compares with 15,000 new cases in the U.S. per year.

Nexavar was approved in China in 2008, but current sales, at $15 million in the third quarter, are based on patients paying for the drug themselves. If the government, however, approves the drug for inclusion in its national reimbursement program, Nexavar sales in China could reach about $300 million a year, according to a recent estimate by Robert Baird & Co. analyst Christopher Raymond

But that reimbursement procedure is complicated and loaded with uncertainty, Coles said.

The national reimbursement list was recently published, excluding Nexavar, but Coles said that the individual provinces have the ability to alter that list for their needs in a process takes 12 to 18 months.

"We are all still learning the process," Coles said. He noted that Onyx and Bayer are now figuring out where Nexavar will fit into the provincial reviews, but said that the drug is still in the early stages of its expected peak presence in the Chinese market.

"I would say that we are at the bottom of the first inning," he said.

In the U.S., Coles said he expects the overall liver-cancer market to grow, but Onyx also will continue its strategy of marketing Nexavar to non-oncologists, a move that has been effective in the past year and is expected to help drive future growth.

Onyx found that liver-cancer patients tend to see an oncologist later in their treatment, prompting a sales force expansion that targets physicians including hepatologists, gastro-enterologists and surgeons.

As Nexavar sales increase, Coles acknowledged that the growth rate will inevitably slow, but he said he expects that the planned addition of approved uses for the drug beyond liver and kidney cancer will boost sales.

Nexavar is currently involved in more than 300 clinical trials, according to ClinicalTrials.gov, with a late-stage trial in thyroid cancer completing in June 2010. Onyx has said it plans to start a Phase III study in breast cancer next year.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

Onyx Pharmaceuticals, Inc. (MM) (NASDAQ:ONXX)
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