美國安進 (AMGN) 2004 Q2 法說會逐字稿

Good afternoon. My name is Michael and I will be your conference facilitator today. At this time I would like to welcome everyone to the Onyx Pharmaceuticals second quarter financial results conference call. All listens have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer period. If you would like to ask a question during this time, simply press star then the number one your telephone keypad. If you would like to withdraw your question, press star then the number two on your telephone keypad.

Thank you. I will now turn the call over to the company for the prepared remarks.

Good afternoon. I'm Julie Wood, VP of Investor Relations and Corporate Communications at Onyx Pharmaceuticals. Thank you for joining us today. This call marks the beginning of regularly scheduled quarterly updates by Onyx's management team. During this call we will review the second quarter and first half 2004 financial results that were released earlier today. In addition, we will provide an important summary of the ASCO data for Bay 43-9006, the anti-cancer agent that we are developing with Bayer Pharmaceuticals Corporation.

Please note that this call, being on August 9th, 2004, is the property of Onyx Pharmaceuticals. Any redistribution, retransmission or rebroadcast of the call in any form without the express written consent of Onyx Pharmaceuticals is strictly prohibited.

First, Hollings Renton, our CEO, will make some introductory remarks and then Marilyn Wortzman, our VP of Finance and Administration, will review our second quarter and six months 2004 financial results. Subsequently, Dr. Leonard Post, Onyx's SVP of R&D will summarize the data presented at ASCO. Finally, Hollings will make some closing comments before opening up the session for questions and answers with the management team.

Please note that we will be making forward-looking statements during this teleconference that could include financial, clinical and commercial projections. Statements that are not historical facts are forward-looking. References to what we expect, believe, intend to do, plan, estimate or other statements referring to future events or results are intended to identify these statements as forward-looking. Forward-looking statements are inherently subject to risks and uncertainties. For a discussion of these risks and uncertainties, we refer you to our annual report on Form 10-K, filed with the Securities and Exchange Commission on March 15, 2004, specifically the section titled additional business risks, as well as quarterly reports on Form 10-Q.

Also note that the forward-looking statements are based on our beliefs and assumptions as of today. These beliefs and assumptions may change as the result of future events or the passage of time, which would cause these forward-looking statements to be outdated and no longer our view. We undertake no duty to update these forward-looking statements.

I'd now like to turn the call over to Hollings Renton.

Thank you, Julie. We are pleased to have this opportunity to talk with the investment community. As Julie mentioned, this is the first of what will be regularly scheduled quarterly calls to provide updates on Onyx's clinical and commercial development, as well as our financial results.

During the last several months, Onyx and Bayer have made continued progress in advancing the development of BAY 43-9006. This included announcing updated preliminary investigator-reported results in renal cancer from the Phase II randomized discontinuation trial at the 2004 ASCO meeting in June.

Based on the earlier data reported from this trial in the fourth quarter of 2003, Bayer and Onyx made the decision to initiate a large international Phase III pivotal study in patients with advanced kidney cancer. This trial is well underway with about 100 sites open and almost all enrolling patients.

In addition to the single-agent data reported for renal cell carcinoma, encouraging early combination data in melanoma was also presented at ASCO. Based on this interim data, Bayer and Onyx announced that we intend to begin a pivotal study in this indication in early 2005.

Together with Bayer, we have now reported on five different combinations, delivering Bay 43-9006 with commonly used chemotherapeutics. These data suggest that Bay 43-9006 can be safely administered with a variety of standard chemotherapies. In order to follow up on these findings and identify additional possible registration paths, we have expanded the number of clinical trials current under way examining the use of Bay 43-9006, both as a single agent and as combination therapy, in a variety of tumor types. In addition to a number of company-sponsored studies, we have also established a relationship with the NCI in which they, through CTEP, will sponsor a variety of additional trials.

As we look out over the next 12 months, we see a number of important milestones that you can use as metrics to chart our progress. These include, number one, completing the Phase II randomized discontinuation study. Late this year, following the analysis of the safety and efficacy data, as well discussions with the regulatory agency, Bayer and Onyx will make a decision about whether or not we will file a new drug application or NDA based on the Phase II data.

Rapidly enrolling the Phase III study in advanced kidney cancer also remains a top priority. We are pleased with the rate of enrollment and are pushing aggressively to complete this stage of the study. Clearly we and Bayer want to gain approval and provide kidney cancer patients access to Bay 43-9006 as rapidly as possible. We will continue to work closely with the FDA to determine whether the data from the Phase II randomized discontinuation trial is strong enough to support a filing. However, as we have said previously, we anticipate that the Phase III study, which was initiated under a special protocol assessment with the agency, will be the basis of an NDA filing utilizing either an interim analysis of a surrogate end point or an analysis of the full data set with an overall survival end point.

Finalizing the design of the pivotal melanoma study, including incorporating input from the appropriate bodies, and announcing the start of that trial is another key milestone.

In addition to these two potential registration paths, we are actively expanding our clinical trial program to identify further commercial opportunities. Company-sponsored trials include single agent studies in liver cancer, as well as in breast, non-small-cell lung and Gleevec-resistant CML. We also have 10 combination studies underway. As we generate and analyze data, results will be presented at clinical meetings.

Upcoming updates include new data at the EORTC and the ESMO meetings. In addition to reporting on some of the combination studies, we will present results from the open label, single-arm liver cancer study that enrolled more than 100 first-line patients who are not eligible for local therapy.

Complementing this intense clinical activity is the build-out of the commercial organization that we plan to have in place and ready to launch Bay 43-9006 as appropriate. With this in mind, in June we announced that we hired Ed Kenney to be Onyx's Chief Business Officer. In this newly created position, Ed will be responsible for building Onyx's U.S. sales and marketing organization, something he has done at three other biotech firms. He has also successfully launched a variety of new products into the cancer space. He's an experienced oncology senior executive and a welcome addition to our management team.

We are also continuing to assess in-licensing and M&A opportunities as we anticipate building a U.S. oncology franchise around Bay 43-9006. These ongoing activities will enable us to be opportunistic should the right opportunity arise.

Also in the near term, we expect Pfizer to begin a Phase I study with the CDK-4 inhibitor that resulted from the Werner-Lambert collaboration. Earlier this year at AACR, Pfizer researchers reported that the compound is a highly selective and potent CDK-4 inhibitor and that oral administration of the agent resulted in marked tumor regression in in vivo animal models. Under the terms of this collaboration, Pfizer will manage and pay for all product development activities. In return, Onyx will receive a high-single-digit royalty and milestone payments.

It's a busy time at Onyx and we have a number of important activities underway. With Bayer, we are intensely focused on registering Bay 43-9006 as quickly as possible and exploring the use of this agent across a number of different tumor types. At the same time, we are engaged in pre-commercial activities as appropriate for a compound at this late stage of clinical development.

With this as a backdrop, I'd like to turn the call over to Marilyn for a recap of our financial results.

Thank you, Hollings. Onyx reported a net loss of $13.1m or 38 cents per share for the three months ended June 30, 2004 and a net loss of $21.3m or 63 cents per share for the six months ended June 30, 2004.

The net loss for the first half of 2004 was in line with company guidance of an expected $20m to $25m net loss for the six month period. R&D expenses for the second quarter and six months ended June 30, 2004, were $9.8m and $16.6m, respectively. This compares to $6.7m and $15.8m in the same period last year.

The increase in R&D expenses in 2004 reflects the increase in clinical development costs associated with Bay 43-9006, partially offset by decreased spending on the therapeutic virus program which Onyx halted in 2003. We anticipate R&D costs will increase as the scope of our clinical trial program also increases.

Marketing expenses were $1.5m in the second quarter and $1.8m in the first half of 2004. This compares to $229,000 and $309,000 of marketing expenses from the same period last year. Consistent with what Hollings said earlier, we expect expenses in this category to increase as we establish a commercial infrastructure and engage in pre-commercial activity.

General and administrative expenses were $2.2m in the second quarter and $3.9m for the first six months of 2004. In 2003 general and administrative expenses were $1.6m in the second quarter and $2.9m in the first half of 2003. We anticipate G&A expenses may increase modestly in the second half of this year.

In the second quarter ended June 30, 2004, Onyx recorded restructuring expenses of $258,000 due to a revision in our estimate related to the discontinued use of a portion of our leased facility. In 2003 Onyx recorded restructuring charges of $2.8m in the second quarter and $3.2m for the first six months of 2003. These were charges associated with the company's decision to stop the development of our therapeutic virus program.

Interest income was $696,000 in the three month period and $1.2m for the six month period ended June 30, 2004. This compares to interest income of $135,000 and $308,000 in the comparable period of 2003. The increase in interest income is the result of higher cash balances as a result of Onyx's two equity financings in July 2003 and February 2004.

At June 30, 2004, we had cash, cash equivalents and marketable securities of $237.2m as compared to $105.4m at December 31, 2003. The higher cash balance resulted from a follow-on equity offering completed in February of this year. The net proceeds to Onyx from this offering were $148.3m from the sale of 4.7 million shares of common stock at $33.75 per share. On August 2, 2004, we had 34.9 million shares outstanding.

The liabilities section of our balance sheet reflects an advance of $20m for milestones paid by Bayer when we initiated the Phase II and Phase III trials. These interest-free loans will be repayable from a minority portion of any future Onyx profits.

Onyx will receive an incremental $10m upon filing of an NDA and $10m more when Bay 43-9006 is approved.

Though we anticipate that expenses associated with Bay 43-9006 may fluctuate on a quarterly basis due to variability of costs associated with clinical trials and third-party vendors, we are estimating the net loss for the full year 2004 will be in the range of $50m to $55m.

I'd now like to turn the call over to Dr. Post for a review of the data on Bay 43-9006 presented during the second quarter.

Thanks, Marilyn. Our ASCO data has been widely reported, so for the purpose of this call I will only briefly highlight the single agent renal cancer data and the combination melanoma data.

As you know, Bay 43-9006 is an novel investigational drug candidate with anti-proliferative and antiangiogenic properties. In preclinical models, Bay 43-9006 inhibited tumor cell proliferation by targeting the RAF/MEK/ERK signaling pathway at the level of RAF kinase. Bay 43-9006, which also exerted an antiangiogenic effect, targets the receptor tyrosine kinases, the EFG receptor and PDGF receptor and their associated signaling cascades, in addition to targeting RAF. We believe that this dual mechanism of action differentiates Bay 43-9006 from other potentially competing compounds that have been commercialized or are in late-stage clinical development.

At ASCO, Dr. Mark Ratain reported interim investigator-assessed data on 106 of the 203 renal patients enrolled in the Phase II randomized discontinuation study. These patients were heavily pre-treated, with 86% having had at least one prior treatment and approximately 40% having had two or more treatments. Further, in all participating renal cancer patients, they were deemed to have progressive disease at study entry.

Efficacy data was presented on the 89 patients who were evaluable at a 12-week assessment point. Of the 89 evaluable patients at 12 weeks, 37 had tumor shrinkages of 25% or more and 38 were classified as having stable disease, which was defined as less than 25% tumor shrinkage or growth. The remaining 14 patients had tumor growth of more than 25% and were deemed to have progressed. At 12 weeks approximately 80% of the evaluable patients had either disease stabilization or tumor shrinkage.

Of those patients who had tumor shrinkage of 25% or more and remained on drug in an open-label format, the estimated median time to progression was 48 weeks or approximately 11 months. Eighty-eight percent of these open-label patients were progression-free at six months. Although inherently difficult to make comparisons across the studies, the estimated time to progress in patients with advanced kidney cancer has been reported to be about two months. Data on the randomized patients is not yet available so, of course, it's not been presented.

Bay 43-9006, which is orally administered on a daily basis, was well tolerated. Drug-related adverse events for the 484 patients with various types of cancer that participated in this study were judged as mild to moderate, consistent with earlier findings.

Specific grade-three toxicities which were all less than 10% in incidence for each of them included diarrhea, hand-foot syndrome, fatigue and hypertension. Skin conditions as a class were the most common toxicity. When necessary, side effects were managed in the clinic by either reducing dose or, in some cases, by dose interruptions.

In summary, in the Phase II randomized discontinuation trial we saw significant anti-tumor responses in the renal cancer patients. However, we need the data on all 203 patients and we need to un-blind the randomized patients before we can make any final conclusions.

As a reminder, the data we are discussing today are on the first 106 of the 203 kidney cancer patients and the results are investigator-reported. The scans are being independently reviewed and we will report on the final data at an appropriate clinical meeting.

As Hollings mentioned, the Phase III trial in second-line renal cancer patients is well underway. This international study, which is expected to enroll over 800 patients, was begin in the fourth quarter of 2003 under a special protocol assessment from the FDA.

The primary end point of the study for full approval is overall survival. The secondary end point includes time to disease progression and response rate. In addition, an independent data-monitoring committee will conduct an interim analysis that could lead to accelerated approval based on surrogate end point.

Additional Bay 43-9006 data was also reported in patients with malignant melanoma receiving Bay 43-9006 in combination with the chemotherapies carboplatin and Taxol. Dr. Keith Flaherty reported on the first 35 melanoma patients enrolled in the study. Of these, 14 patients or 40% had partial responses lasting six months or more. Eleven of the 14 PRs were ongoing at the time of the data cutoff, ranging from six months to about 20 months. Fifteen of the patients had stable disease and six patients progressed or exited the study for other reasons.

At the time the report was prepared, the estimated time to disease progression was 10 months. These patients had very advanced disease. Twenty-two of the patients, or about two-thirds of the group, were categorized as M1C, which means the cancer had spread to their internal organs such as the bowel or liver. Based on encouraging data from this study, Bayer and Onyx are planning a pivotal study in melanoma scheduled to begin in early 2005.

In addition, we've now reported on five combinations administering Bay 43-9006 with commonly used chemotherapy agents such as carboplatin, Taxol, gemcitabine, oxaliplatin, doxorubicin and irinotecan. The results today suggest that full-dose Bay 43-9006 can be combined with a range of different chemotherapies and more studies are planned.

Now I'll turn the call back over to Hollings for some closing comments.

Thanks, Len and Marilyn. While we're pleased with what Bayer and Onyx have accomplished to date, there are a number of critical tasks still ahead. By the end of the year, we intend to make a decision regarding a possible Phase II filing for advanced kidney cancer.

Let me remind everyone that the primary goal of the Phase II randomized discontinuation trial was to rapidly identify the first Phase III indication. It was not intended to be used as a registration study. So while we will certainly take advantage of any opportunity that manifests itself, we remain consistent in suggesting that the most likely scenario is a filing based on the randomized Phase III design, as I mentioned earlier. Enrollment in that Phase renal trial is progressing well and is ahead of our internal expectations.

We are also immersed in working out the details for a pivotal melanoma trial. Once all the specifics are finalized, we will share with you some of the trial parameters. A number of other studies are ongoing. They are intended to expand our understanding of this agent and direct future clinical activity.

We remain excited about the progress and potential of Bay 43-9006 and are actively advancing its clinical development while building out our commercial capabilities. Together with our partner, Bayer, we are moving ahead to secure drug registration for Bay 43-9006 as quickly as possible. We have one Phase III study underway and have announced plans to begin a second pivotal study in patients with malignant melanoma. With a number of other trials in progress in multiple tumor types, we anticipate identifying additional paths to registration.

At the same time, we believe that Bay 43-9006 may have broad application as it has been shown to be well tolerated and it can be delivered continuously on an oral basis. Since Bay 43-9006 also appears to have non-overlapping toxicity with a number of standard chemotherapeutics, it may also be well suited for combination therapies, an approach often used to treat patients with cancer.

That concludes our formal remarks and what we'd like to do now would be to take questions.

At this time I would like to remind everyone in order to ask a question, please press star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Your first question comes from Steven Harr with Morgan Stanley.

Hi. Good afternoon.

Hi, Steve.

So a couple of quick questions and I apologize I was a couple minutes late in joining if you already said something around these, but is there any greater granularity you can give us around the actual timing or medical meeting when we may see the renal cell data?

And also, a couple quick followups on some of the previous data. Did you just have any data on the actual overall survival time for patients in the Phase II renal cell trial or is it still just what we've seen on the survival and responders?

So let me address the first one. In terms of more specificity around the exact timing of the disclosure on the Phase II data, we don't have any more specific guidance to give you, other than to say that we-- what we previously said, which we intend to look at the data and to have the appropriate discussions with the regulatory bodies and make a decision by the end of the year whether it makes sense to file. How we disclose all of that is something that we're still working out with Bayer.

But once you've have the data, you may or may not disclose it to us?

Well, no, we certainly will disclose it. The question will be to what level, when and to what level. We put out some of the data and clearly the study would be reported out in its entirety at the appropriate clinical meeting.

And then in terms of overall survival, I don't-- you know, Len, we really haven't presented--

We haven't presented that. I mean, the new news at ASCO was the time to progression data and as more time passes we will, of course, pull together the survival data when we get enough of it and finish the analysis, recognizing that it will be-- we don't have a control group.

Do you have a median time to progression in general or just the time to progression in the responders?

Well, the-- if you're asking about the time to progression across all the patients on the trial, that's a little tricky because remember there's a group of patients that go on to placebo for a while. So it's not straightforward to present that data and we haven't actually tried to do that yet.

But once we un-blind the trial, there will be ways that we can analyze that.

And if I could, just one more question. You said that the renal cell cancer trial is enrolling ahead of your internal projections. Have you guys any-- or could you now disclose what your internal projections are in terms of approximately timing of completion?

No, I-- Steve, I think again we've not made those progressions public, largely because we obviously have some other competitors in this space and we'd just as soon not announce where we are with that, since they're not sharing their information with us, as well.

OK. Thank you very much.

Thanks, Steven.

Your next question comes from David Bouchey with RBC.

Hi, David.

Hey, guys. Let me ask you if you can give us a little bit more clarification on what the pre-commercial activities are that are being included in your marketing line on your income statement?

Yeah. Obviously, this is the first time that we've broken out these expenditures in our financials and, as you could see, in this current-- just past quarter they are adding up now. It's a range of different things, as you might expect, sort of standard type of activities in getting ready for potentially a launch of the drug, which includes a number of things around market research, as well as, as you know, the second quarter the big meeting of the year is the ASCO meeting, so there were expenses associated with that.

But there are going to be a range of pre-commercial expenditures as we look at what's happening in the landscape, where we're going to be in terms of the label, where competitors are, how we're going to price the compound and all those-- a variety of other activities there. So we-- and as I did mention, we did begin some additional hiring with Ed Kenney and he's already brought in a few people, as well. So there's clearly now staff being hired at Onyx, as well as staff at Bayer that are working on the project.

Ah, so it's Ed's salary that's caused it to jump up that much, huh? I kind of guessed that would be the case.

Well, actually it was his bonus.

OK. So do you see these marketing activities expanding in a different area such as market research in terms of price, et cetera, as we go forward in the year?

Yes, I think that's exactly the type of things that are still yet to be completed.

OK. And could you tell me again what you expect to present at EORTC?

EORTC will be a presentation on the Phase II hepatocellular carcinoma trial. That was a single-arm Phase II study of over 100 patients. There will also be a presentation on some sarcoma data and one of the chemotherapy combinations will be presented as well, the combination with Taxotere.

OK. Thanks.

Your next question comes from David Witzke with SunTrust.

Hi, David.

Hi. Thanks for taking my call. A followup on the EORTC. Will we see the entirety of the data for all 100 patients and how do you think about go/no-go hurdles regarding moving this into a pivotal program?

Well, it's probably a little early to start talking about what's going to be in that presentation and what the conclusions are going to be, but it'll be a pretty good look at what happened on that trial. I don't know if we can say any more.

No, and I think-- it's again, over 100 patients. It'll be pretty-- relatively complete report on that and then, obviously, with that data we can talk about what the next steps are.

Yeah.

And regarding-- I know doxorubicin's often used by convention there, although not approved. You have some combination data with doxorubicin. Was that safely combinable and did you look at it in HCC patients?

Yeah. That was actually a poster at ASCO that looked at that. It was a Phase I study looking at the combination of doxorubicin and 9006. The conclusions was we could use a full dose of 9006 and there were-- at the end of that study, once we got the safety conclusion we added a number of hepatocellular carcinoma patients, just so that we could nail down that it was also usable in that patient population.

OK and as far as in other combinations, you know, for example, Avastin was not impressive as a single agent in colorectal 'til you got it with irinotecan and your agent, same case in melanoma. Are there any other combination areas where you're seeing a much stronger signal in combination? Ovarian, colorectal or in non-small-cell lung or in pancreatic?

Yeah, I mean, we really, probably-- we can't talk about data any more than what was presented at ASCO and I think so far, by far the most dramatic, has been the melanoma combination. And part of the reason why that was so easy to see was that that's a disease that doesn't respond to chemotherapy very well at all. But that's the clearest signal we have so far, but it's an area where we're doing a lot of additional work. As Hollings mentioned, we have 10 trials ongoing in combinations and we'll do more.

And, in general, I mean, clearly the results in melanoma were very strong, which is why we're moving from a uncontrolled study in combination with melanoma-- in combination with carbo-Taxol in melanoma to a pivotal study. The path forward in a number of these other tumor types in combination would be to, again, look for signals, but the likelihood for a number of these would be that one would want to move next into some randomized studies, because that's the clearest way to tease out the benefit of your agent in combination with chemotherapy.

That is helpful. Thank you.

Your next question comes form Jim Reddoch with Friedman Billings.

Hey, Jim.

Good afternoon. How are you?

Fine, thanks.

Just a couple of followups on a couple of things that have come up. On the melanoma trial that you expect to start at the beginning of next year, can you just talk about the design of that trial, such as what do you randomize against since the chemo combo that you have used previously that showed such good results is an unconventional therapy to use in that particular cancer and are you asking for an SBA and when you might hear back from something like that if you were?

Well, the study is going to be Taxol, carboplatin plus and minus Bay 43-9006. That's the study you need to do to establish the contribution of 9006 to the chemotherapy. So-- in that sense, we know the study will look like that.

Some of the other details are actually still a work in progress. Putting together a Phase III study involves a lot of things, you know, working with the investigators with the FDA and, like I said, we're working on that very hard right now and so there's probably not much more I can say other than that the design will be the chemotherapy plus and minus 9006.

And I guess the other thing that you're implying there, Jim, is that carbo-Taxol is not a standard in this disease. However, with the activity that we've seen, plus the fact that to the degree there is a standard chemotherapy, it's not all that active and that is DTIC. I think we did-- we knew that to begin with and we learned more about that out of competitors' studies that showed it had a very low response rate in a randomized study.

Having said that, however, I mean clearly one of the things we've also shown is that we do have a combination, an earlier-stage combination with DTIC underway.

OK. I think at ASCO there was a presentation that suggested that the response rate that you should expect from carbo-Tax in second-line patients was around 10% or 15%. Is that kind of what you're assuming in putting this trial together?

Well, yeah, that tends to be the response rate that people have reported. One report for a carbo-Taxol combination, another for-- yeah, there were various reports with Taxane. So that's probably the ballpark response rate that we're looking at for the chemotherapy alone, although, as we know from the experience with other chemotherapies, that's highly dependent on the particular patient population and one other Taxol-carbo study that looked at second-line patients showed a response rate of less than 10%. So our-- from what we can tell, it's pretty low.

OK, great. And when do you expect that an interim look could be taken from the Phase III that's enrolling now, based on the enrollment speed?

Again, I think that's specifics that we haven't and we don't want to talk about, for competitive reasons.

OK. Thank you.

Thanks.

Your next question comes from Joshua Schimmer with SG Cowen.

Hi. Thanks for taking the question.

Hi, Josh.

With regard to the interim analysis, which surrogate end points will you hang on to support the filing?

Yeah, Josh, we actually have not disclosed publicly the details of the SBA with the Agency, either the exact plan around survival in terms of the statistical plan, nor the details around the end point, the timing or the statistical plan around that surrogate end point. Although I appreciate everybody's curious about that, we do, and part of the reason why we suggested that people focus on the trials, the randomized study as opposed to the Phase II study is that it's a fully controlled study, so we have a control arm there where you can tease out the differences very carefully between-- that's being generated by the agent, by 9006.

Fair enough. May I just ask if the interim analysis itself, a description of that does fall under the SBA?

Yes. We have said that that's included under the SBA.

OK, great.

Your next question comes form Alex Hittle with A.G. Edwards.

Hi, Alex.

Hello. At ASCO you were talking about the sort of earliest data, potential un-blinding being the 23rd of July. And I was wondering, are you currently un-blinded to the randomized portion of the Phase II trial?

No, I think what you're referring to, Alex, is that if one were to take six months from the date that the last patient was treated on the study, that's the 23rd of July, which would be the earliest one would have the opportunity. Under the protocol, the way that this works is one has to lock the database down and then unlock it, so we are not in possession of any un-blinded data.

OK. And are you-- do you have a notion of when you will see that?

Again, other than the specifics around the fact that we need to get the data, look at it internally with our partner, Bayer, and then have the appropriate dialogue with the Agency, the guidance that we're providing is that we will have done both of those two steps, which are both critical for making a final decision, to make that decision by the end of the year.

OK. And if I could sort of jump horses here and ask about cash burn on the year, where is that coming out as opposed to the net income? And then, if that were kind of a run rate here from the second half here, what would be looking at in '05?

I think the-- you know, the guidance that Marilyn just provided was full year between $50m and $55m and, as you saw, the quarter came in at about $13m, roughly, in terms of the loss for just the second quarter. So, obviously, the rate could be somewhat higher, quarterly rate, in the second half of the year to take us from a little over $21m to the $50m to $55m for the year.

OK. And then that would sort of be your run rate heading into next year?

Well, I think that that's, again, that's a little-- there's a lot of things that could change that burn rate for next year, which are very difficult for us to project at this stage. So clearly we're not in a position to provide, yet, any guidance. And, as you might expect, that guidance would depend, among other things, on clinical trials, on timing to filing and other associated pre-launch expenses.

Sure. Fair enough. Thank you very much.

Thanks, Alex.

Your next question comes form Ron Ellis with Leerink Swann.

Hi, Ron.

Hi. Thanks for taking the call. Just a couple questions, one for modeling purposes. Should we assume that the CDK inhibitor that you'll receive a milestone for when that is advanced to the clinic?

Yeah, we actually do get a milestone when the Phase I trial is active.

OK.

And we expect that to be, you know, very soon.

[crosstalk]

Is that in the guidance?

[inaudible]

Is that in the guidance loss for the year?

Yeah, I think that's-- it's, again, it's under a million dollars, so it's not going to, you know, modify the guidance.

OK. And then for the melanoma Phase III, is that being conducted with any cooperative groups?

Well, again, we haven't finalized the trial design or the sites or the centers that are involved in that, so there are various options that we are exploring, but until we have things worked out in its entirety I think it's premature for us to comment on how these studies are going to be run.

And just one last question, please. The CTEP trial that Len mentioned, any specifics? Solid tumors or any specific areas that they're going to be investigating?

Actually, there's quite a variety of different tumor types and including some combination work. Neither we nor they, as far as I know, have put out a list of what they are, but they'll probably start appearing on websites pretty soon.

Len, the lung cancer, is that part of that?

Well, there are two lung cancer studies. One is the company-sponsored, single-agent, non-small-cell lung cancer, just a single-arm Phase II, and the other is an ECOG randomized discontinuation in lung cancer. That was something that was really started up separately before we got the CTEP agreement. So when we refer to the CTEP studies, those are things in addition to that ECOG randomized discontinuation lung cancer study.

And we've also identified combinations, as well. There are some-- You know, one of the newer combinations is with-- in combination with Iressa, so that's also a company-sponsored study.

Specifically in lung cancer.

Lung cancer, yeah.

Has that trial started?

Yes.

So Bay plus Iressa on non-small-cell lung?

Right.

OK. Thank you.

Your next question comes from Mark Monane with Needham & Company.

Hi, Mark.

Hi, this is actually Derek Tan [ph]. Thanks for taking my questions. First, regarding the ASCO melanoma data, I was wondering, out of that 14 PRs, how many patients are in that 22 patients with the visceral mass and how many patients just have the soft-tissue mass?

You're asking how many are the--

How many out of the responders?

Rather than getting into the exact numbers, the interesting thing that Dr. Flaherty presented was the overall response rate was 40% among all 35 patients and among the 22 patients that had M1C, the response rate was 36%.

OK. That's great. Thanks. Now also, could you go over with us, what was the exact definition of the PRs? And what criteria did you use? Or is that totally tumor burden?

The melanoma PRs?

Right.

You're asking about? That was a formal RESIS [ph] definition.

Oh, that's a-- OK. And I guess one final thing. If you were to do the pivotal melanoma trial with the carbo-Taxol, is there any survival data that we have form literature regarding the carbo-Taxol alone in melanoma?

No.

No, so that would be hard to project, right?

Well, I think that you could make a good guess, but there's no-- there's no formal data on survival with carbo-Taxol as far as I'm aware.

I think most of the agents-- there's not been, obviously, anything approved and when you look in the literature it's well under a year.

Yeah. I mean, nothing has really shown--

Right, nothing seems to be able to extend the survival rate.

That's right. That's what I meant by make a good guess.

OK. All right. Thanks very much.

Once again, ladies and gentlemen, I would like to remind everyone, in order to ask a question please press star, then the number one on your telephone keypad. Your next question comes from Brian Rye with Janney Montgomery Scott.

Hi, Brian.

Hi, Hollings, how are you?

Good, thanks.

Just a quick question, taking a step back. You mentioned in your prepared remarks something about some-- you know, looking obviously to be opportunistic with some in-licensing or product acquisition opportunities. I was just curious sort of what the scope of the company's search might be. I would assume it's pretty much maintaining a focus in cancer, but any sort of details if that's influencing sort of the addition of your marketing staff or anything like that? Thanks.

Yeah, sure, Brian. Clearly, when we made the decision to abandon the virus program, the pipeline got put on the shelf and our focus is very clearly on 9006. You know, there's no opportunity to leverage infrastructure if we're not successful with 9006. So that's the main focus of the company.

But over a year ago, when we made the decision we recognized that we would ultimately like to leverage the infrastructure that we put in place and, therefore, have an established process at both licensing, as well as potentially product acquisitions or other transactions to allow us to expand our pipeline. And it's a continuous process.

It's not easy to find good products. The focus, clearly, for us is in oncology. I mean, we don't have a desire, since our franchise is oncology, to do things outside of oncology. So it's very much an oncology focus, a product focus, to complement the pipeline.

We do have, obviously, an exciting late-stage compound. It gives us the luxury of looking at some things that could be slightly earlier stage, but, again, it's a continuous process. It's not easy to find really good things and it takes a period of time, which is why we say we wanted to have an ongoing process and be opportunistic.

Thanks, Hollings. That's helpful.

Thanks.

At this time there are no further questions. I will now turn the call back to the company for any closing remarks.

Great. Well, thank you, everybody, for joining us this afternoon on our first quarterly call. We look forward to ongoing dialogue with you on these regular quarterly updates. So thank you, again, and I also invite you, if you have any further questions, just please pick up the phone and give Julie Wood a call.

All right, everybody, have a good afternoon. Thanks.

This concludes the Onyx Pharmaceuticals second quarter financial results conference call. You may now disconnect.