Onyx Is Almost There

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.

Want to know the latest drug stock we've picked for the Fool's market-beating Rule Breakers newsletter service? Take a look at all of our stock recommendations, from market sectors all across the spectrum, with a free 30-day trial.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is an Inside Value recommendation. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 533543, ~/Articles/ArticleHandler.aspx, 5/25/2016 7:22:21 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Orelli

Dr. Orelli is a Senior Biotech Specialist. He has written about biotech, pharmaceutical, and medical device companies for The Motley Fool since 2007.

Today's Market

updated 10 hours ago Sponsored by:
DOW 17,706.05 213.12 1.22%
S&P 500 2,076.06 28.02 1.37%
NASD 4,861.06 95.27 2.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
ONXX.DL $0.00 Down +0.00 +0.00%
Onyx Pharmaceutica… CAPS Rating: **
PFE $34.10 Up +0.43 +1.28%
Pfizer CAPS Rating: ****