The revenue side of Onyx Pharmaceuticals' (Nasdaq: ONXX ) earnings announcement yesterday afternoon was fairly uneventful, since Bayer (NYSE: BAY ) , its marketing partner on cancer-fighting drug Nexavar, announced a jump in the drug's sales earlier in the day. The only remaining question was whether the sales would be enough to push Onyx, the one-drug wonder, into the black.
It wasn't even close. The company reported a net loss of $10.8 million for the second quarter. That's certainly an improvement on the $31.5 million loss in the second quarter of last year, but Onyx's bottom line is still being hampered by multiple clinical trials to try to expand the treatment indications for Nexavar. The company's selling, general, and administrative expenses also increased as it prepares for the launch of the second indication for the drug. And employee stock-based compensation contributed $3.6 million to the loss for the quarter.
Sales of Nexavar began to stagnate in the first quarter, as it ran into competition from Pfizer's (NYSE: PFE ) Sutent, but an upswing returned in the second quarter. The 34% jump in Nexavar revenues over the first quarter was probably a result of having oncologists now prescribing the drug off-label for treating liver cancer.
Compelling clinical trial data at the American Society of Clinical Oncology last June probably persuaded many doctors to prescribe the medication for this purpose ahead of FDA approval, which is expected early next year, along with a European OK.
Getting the approvals to use Nexavar for treating liver cancer will allow Onyx and Bayer's sales forces to market the drug for liver cancer as well and should drive sales even more. With Sutent still in phase 2 trials for liver cancer, Nexavar will have the market all to itself for a while.
But to make Nexavar a blockbuster, Onyx needs to move into the treatment of cancers with larger populations. Toward that goal, it has initiated two phase 3 trials in non-small-cell lung cancer and two phase 2 trials in breast cancer. The other area where it can gain market share is as an adjuvant therapy, so that it's not competing with current treatments. The company has multiple clinical trials under way, in which the drug is being tested in combination with various chemotherapies and after surgery for various cancers, including kidney cancer, for which it's already approved as a monotherapy.
Onyx still has plenty of time to make it into the black. After bringing in $174 million from a public offering in June, the company had $454 million in the bank at the end of the quarter. But I would rather see it become cash-flow-positive sooner rather than later, since that would give it even more cash to drive Nexavar sales. I think it's likely I'll have to wait to get my wish until after Onyx starts marketing Nexavar for treating liver cancer next year.
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