美國安進 (AMGN) 2005 Q2 法說會逐字稿

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  • Operator

  • Good day, ladies and gentlemen, and welcome to the Onyx Pharmaceuticals 2005 Second Quarter Financial Results.

  • My name is Beverly (ph), and I will be your coordinator for today.

  • [OPERATOR INSTRUCTIONS.]

  • As a reminder, this conference is being recorded for replay purposes.

  • I would now like to turn the presentation over to your host for today’s call.

  • Ma’am, please proceed.

  • Julie Wood - VP of IR and Corporate Communications

  • Thank you, Beverly.

  • Thank you for joining us today.

  • I’m Julie Wood, Vice President of Investor Relations and Corporate Communications at Onyx Pharmaceuticals.

  • During this call, we will review our second quarter financial results that were released about an hour ago.

  • In addition, we will update you on our ongoing precommercial activities, as well as provide a brief review of the clinical data presented at ASCO.

  • Please note that this call, being held on August 4th, 2005, is the property of Onyx Pharmaceuticals.

  • Any redistribution, retransmission or rebroadcast of the call in any form without the expressed written consent of Onyx Pharmaceuticals is strictly prohibited.

  • The order of our prepared comments will be as follows -- after Hollings Renton, our CEO, makes some introductory remarks, Marilyn Wortzman, our Vice President of Finance and Administration, will review our second quarter results.

  • Following Marilyn, Dr. Leonard Post, Onyx’s Senior Vice President of R&D, will summarize some of the Sorafenib data presented during the second quarter.

  • Subsequently, Ed Kenney, our Executive Vice President, will provide an update on our precommercial activities.

  • Finally, Hollings will make closing comments before opening up the call 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 fact 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 for the year ended December 31, 2004, as amended, filed with the Securities and Exchange Commission, specifically the section entitled, “Additional Business Risks,” as well as to our quarterly reports on form 10-Q, including our second quarter report, which will be filed with the SEC by August 9th, 2005.

  • Also note that the forward-looking statements are based on our beliefs and assumptions as of today.

  • These beliefs and assumptions may change as a 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 would now like to turn the call over to Hollings Renton.

  • Hollings Renton - CEO

  • Thank you, Julie.

  • In the second quarter, we continued to build on the momentum that was established earlier in the year when we announced positive results from our phase III trial in patients with advanced kidney cancer.

  • Subsequently in July, we announced, with our partner Bayer, that we had completed the filing of the first NDA for Sorafenib.

  • At the time of the filing, we requested a priority review, given Sorafenib’s fast-track designation status and the results of the phase III trial.

  • We expect to hear from the FDA in September regarding the acceptance of our dossier and its review status.

  • If the NDA is granted a priority review, the FDA would act on the NDA within six months of the filing date.

  • Some of the other milestones that we achieved during the second quarter included, in April, we decided to allow crossover of the placebo patients to Sorafenib treatment in our phase III renal study.

  • This decision was based on the very favorable progression-free survival data generated in that pivotal study, and subsequent to conversations with our principal investigators, the data monitoring committee and the FDA.

  • At ASCO, investigators presented the positive results from the pivotal phase III trial, as well as from the renal patients who participated in the phase II randomized discontinuation study.

  • Len will briefly summarize this data later in the call.

  • Also in May, together with Bayer, we initiated a treatment protocol in the United States to provide advanced kidney cancer patients with broader access to Sorafenib.

  • This program generated significant interest when it was announced during ASCO, and patients began receiving Sorafenib through this protocol in June.

  • We believe, based on the significance of the phase III data, that giving renal cancer patients access to Sorafenib was the appropriate action.

  • Len will also comment on the status of this initiative during his remarks.

  • With Bayer, we also established metastatic melanoma as an additional possible registration path.

  • This included initiating two pivotal phase III studies, one company-sponsored and the other sponsored by the Eastern Cooperative Cancer Group, or ECOG.

  • In addition to Sorafenib, patients randomized to the treatment group in these studies will receive the chemotherapeutics Carboplatin and Paclitaxel.

  • As you may recall, we also initiated a pivotal phase III single-agent trial in advanced liver cancer at the end of the first quarter.

  • We are currently pursuing three tumor types for potential registration, with two, metastatic melanoma and liver cancer, pending the outcome of recently initiated studies.

  • In addition to advancing three tumor types to phase III status, we have a number of other earlier-stage studies underway.

  • These include both single agent and combination trials in a range of tumor types, including lung cancer, prostate cancer, breast cancer and ovarian cancer, and are both company and NCI-sponsored trials.

  • Through these trials, we intend to identify additional registration paths in other tumor types.

  • In addition to these important product development milestones, we have been continuing the build-out of our commercial capabilities so that we will be positioned to launch Sorafenib without any delay as soon as we might get a new drug approval.

  • These activities have included hiring well over half of our field-based sales and marketing team, sponsoring continuing education seminars nationwide, and engaging in a variety of other planning and pre-launch activities.

  • Ed Kenney will talk more in detail about our commercial initiatives later in the call.

  • We started the year with a promising compound, and, with Bayer, a shared optimism in the potential of Sorafenib as a potentially important emerging oncology compound.

  • As we have progressed through 2005, we have demonstrated the activity of Sorafenib in the largest international phase III study ever conducted in advanced renal cancer patients.

  • We are pleased with this very tangible progress, and look forward to ongoing dialogue with the FDA regarding our recently submitted NDA.

  • This progress occurred earlier than we originally anticipated.

  • Consequently, we and Bayer must be prepared to launch before year-end, which will increase our investment in Sorafenib in 2005.

  • Additionally, the phase III results were so compelling that an expanded access program, which was not in any prior plan, was launched in May, further contributing to increased costs in 2005.

  • Now, I’ll turn it over to Marilyn to discuss our second quarter financial results, as well as our projections for the second half of the year.

  • Marilyn Wortzman - VP of Finance and Administration

  • Thank you, Hollings.

  • Onyx reported a net loss of $18.1 million, or $0.51 per share, for the three months ended June 30th, 2005. in the second quarter of 2004, Onyx reported a net loss of $13.1 million, or $0.38 per share.

  • Onyx reported no revenues during the second quarters of either 2005 or 2004.

  • R&D expenses for the second quarter ended June 30th, 2005 were $12.1 million.

  • This compares to $9.8 million in the same period last year.

  • The increase in R&D expenses in 2005 reflect higher clinical costs as our Sorafenib program has expanded to include four phase III studies, numerous phase II and earlier-stage phase I trials, as well as the initial expenses associated with the expanded access program.

  • We expect expenses in this category to increase in the second half of the year.

  • Marketing expenses were $5.4 million in the second quarter of 2005.

  • This compares to $1.5 million of marketing expenses from the same period last year.

  • This increase was due to hiring and third-party activities in preparation for the possible commercial launch of Sorafenib.

  • As we are anticipating a product launch in the first half of 2006, marketing expenses are expected to grow significantly in the second half of 2005 as we prepare for that event.

  • General and administrative expenses were $2.5 million in the second quarter of 2005. in 2004, general and administrative expenses were $2.3 million in the second quarter.

  • We anticipate G&A expenses will increase during the year as necessary to support the needs of the growing commercial organization.

  • Interest income was $1.4 million in the three-month period ended June 30, 2005.

  • This compares to interest income of $696,000 in the comparable period of 2004.

  • At June 30th, 2005, we had cash, cash equivalents and marketable securities of $177.4 million as compared to $209.6 million at December 31, 2004.

  • On August 3rd, we had 35.4 million shares of common stock outstanding.

  • As a result of filing the NDA, we received a $10 million milestone payment from Bayer earlier this month.

  • This milestone will be reflected as an increase in our cash and liabilities on our balance sheet.

  • As a reminder, these advances do not flow through our P&L.

  • The final milestone advance of $10 million will be triggered by the U.S. approval of Sorafenib.

  • As we have indicated in previous calls, we expect expenses to increase throughout 2005 as we prepare for the possibility of a commercial launch in the first half of 2006, and as we continue funding our extensive clinical program.

  • We are currently estimating that the net loss for the full year 2005 will be approximately $100 million.

  • Before concluding my remark, I would like to mention that our collaboration agreement calls for Onyx and Bayer to share equally in all program costs on a worldwide basis, except in Japan.

  • In the United States, Onyx intends to co-promote Sorafenib, and will share equally in all profits.

  • Everywhere else in the world except Japan, our share of profits will be slightly less than 50%, since Bayer has exclusive marketing rights.

  • Our P&L accounting treatment will be similar to other SEC registrants with co-promotion arrangements.

  • I’d now like to turn the call over to Dr. Leonard Post for a review of the Sorafenib data presented at ASCO.

  • Leonard Post - SVP of R&D

  • Thank you, Marilyn.

  • As Hollings mentioned and most of you know, during the second quarter, Dr. Bernard Escudier co-primary investigator of the phase III TARGETs kidney cancer trial presented final progression-free survival data at this year’s ASCO meeting in Orlando.

  • As you may recall, 903 patients with advanced kidney cancer who had failed one prior systemic therapy had been randomized in this ongoing multi-national study.

  • Dr. Escudier reported that Sorafenib doubled progression-free survival as assessed by independent radiologic review.

  • More specifically, progression-free survival was increased to a median value of 24 weeks in patients receiving Sorafenib as compared to 12 weeks for patients receiving placebo, with a P value of less than .000001, and a hazard ratio of .44.

  • In addition, he reported that 74% of patients receiving Sorafenib experienced some tumor shrinkage.

  • The drug effect was also observed across all patient sub-groups that were examined.

  • Patients in these cohorts benefited from Sorafenib regardless of age, Moetzer (ph) score, time from diagnosis, or whether they had received previous cytokine treatment.

  • Dr. Escudier also reported on the 769 patients evaluated for safety.

  • Drug-related adverse events, all grades, were similar to what had been observed in previous clinical trials, and included rash, diarrhea, hand/foot syndrome, hair loss, itching, nausea, hypertension and fatigue.

  • However, there was no significant difference in fatigue between the treatment and placebo arms of the study.

  • Based on the clinical and statistical significance of this data, Bayer and Onyx allowed patients enrolled in the trial who were receiving placebo to cross over to drug treatment.

  • This study is ongoing, and patients will continue to be treated and followed for survival.

  • However, it is expected that the decision to allow crossover will significantly reduce the number of patients receiving placebo, and impact the overall survival analysis.

  • While survival data will be presented at a future scientific meeting, that forum has not yet been chosen.

  • Discussions are ongoing with the FDA and other regulatory agencies regarding the exact nature and timing of the pending survival analysis.

  • As a reminder, progression-free survival is the basis of our recent NDA filing.

  • Also at ASCO, Dr. Mark Ratain presented data on the kidney cancer patients who participated in the now-completed phase II study.

  • While I won’t go into detail on those results here, I would like to highlight a couple of points.

  • The phase II study met its primary end point, demonstrating that stable disease was indeed a drug effect.

  • Post-randomization at 12 weeks Sorafenib-treated patients had a median progression-free survival of 24 weeks as compared to 6 weeks for placebo patients with a P value of 0.0087.

  • Clinicians also reported similar levels of tumor shrinkage to that observed in the phase III trial.

  • According to the trial protocol, patients who were judged to have stable disease during the first phase of the study, and who were then randomized to placebo, were allowed to go back onto Sorafenib treatment when their disease progressed on placebo.

  • These progressed patients stayed on drug for a median treatment time of 24 weeks from the time of their progression on placebo until the end of their treatment, suggesting that some may have benefited from re-treatment with Sorafenib.

  • Data from this study is being used to support the NDA filing.

  • Based on these very positive results, Bayer and Onyx are sponsoring a broad expanded-access program for patients who have not previously received Sorafenib.

  • The U.S.-based treatment protocol, which was reviewed by the FDA, is currently enrolling patients nationwide.

  • In addition to the U.S.

  • NDA filing, a European filing is also in preparation, and, if approved in the European Union, the number of patients that could potentially benefit from Sorafenib therapy could significantly increase.

  • Onyx and Bayer also have other studies underway in kidney cancer.

  • There is a phase II study evaluating Sorafenib versus Interferon in first-line patients.

  • About 150 people will be enrolled in this trial that has progression-free survival as its primary end point.

  • This trial also gives clinicians the option of dosing up to 600 milligrams twice a day after progression to follow up observation by phase II investigators that patients who tolerate 400 milligrams B.I.D. can sometimes be safely given a higher dose.

  • Another phase II trial just starting under the sponsorship of the NCI combines Sorafenib with Avastin treatment.

  • As Hollings mentioned, we recently started two pivotal studies in metastatic melanoma comparing administration of Sorafenib with Carboplatin Paclitaxel to treatment with Carboplatin and Paclitaxel alone.

  • The primary end point for the company-sponsored study, which will enroll over 200 patients, is progression-free survival.

  • The primary end point of the ECOG study, with a projected enrollment of about 800, is overall survival.

  • Patients enrolling in the ECOG study cannot have had previous systemic chemotherapy, while those enrolling in the company-sponsored study must have had one prior systemic treatment with chemotherapy.

  • Both trials are being conducted after a special protocol assessment, or SPA, by the FDA.

  • The phase III liver cancer study that Hollings referred to is an international placebo-controlled trial evaluating Sorafenib as a single agent.

  • We plan to enroll more than 500 first-line patients in the trial that has efficacy end points of overall survival, time to symptom progression and time to disease progression.

  • This study was also reviewed via Special Protocol Assessment by the FDA.

  • In addition, for liver cancer patients, we have a randomized phase II combination study with the chemotherapeutic agent doxorubicin also in progress.

  • In addition to the pivotal trials in advanced kidney and liver cancer, as well as in metastatic melanoma, we are actively exploring a variety of other tumor types.

  • We are encouraged, but appropriately cautious, about preliminary data that we’ve seen in some of these cancers.

  • As this data matures, it will be presented at scientific and clinical meetings.

  • In the second half of the year, we hope to provide updates on lung, breast and prostate trials, as well as combination studies with various anti-cancer agents, including Avastin.

  • The objective of this broad clinical program is, with Bayer, to identify a registration path in one of the more common malignancies.

  • The data generated so far, in a variety of settings, reinforces our belief that Sorafenib may have broad utility across a number of different cancers.

  • And, as we have repeatedly seen, its ability to be readily co-administered with other anti-cancer therapies makes it ideally suited for combination therapies.

  • Now, I’ll turn the call over to Ed Kenney.

  • Ed Kenney - EVP

  • Thanks, Len.

  • I think it’s safe to say that the commercial teams of the two companies are facing a challenge from our own product development group, based on the rate at which the Sorafenib has progressed, and we view that as a very positive situation.

  • Since Bayer and Onyx will be co-promoting Sorafenib in the U.S., we are committed to having our respective field forces fully in place and trained in the second half of this year in order to move quickly in response to a positive FDA decision.

  • To achieve that state of readiness, we have completed the hiring of our sales and marketing management teams, and these individuals are now completing the build-out of their respective groups.

  • We currently expect to have our hiring complete by the end of this quarter, and, ultimately, the joint field team is expected to include about 100 dedicated oncology professionals.

  • On average, our sales representatives come to us with 12 years of prior pharmaceutical sales experience, and 7 years of specific oncology experience.

  • And to satisfy our goal of building a group with a diverse set of backgrounds, they have come to us from over 17 different oncology companies.

  • Important decisions about size, organizational structure and key account coverage have all been made by the partners, and a number of division of labor, if you will, decisions have been reached that should make for an effective and efficient commercial effort with negligible redundancy.

  • On the marketing side, there are major initiatives well underway now in the critical areas of market research, pricing and reimbursement.

  • In addition to a coordinated marketing and sales build-out, the medical affairs groups of Bayer and Onyx are close to full strength.

  • This combined team has been extremely busy supporting a broad-based CME initiative, and they are also helping to facilitate our expanded access treatment protocol.

  • We have already held, or have plans to hold, more than 50 continuing medical education programs through the end of the year. and as you can imagine, with the profile of Sorafenib that has begun to develop, our medical affairs team is also moving forward on a number of inquiries about investor-initiated studies.

  • We’re moving very rapidly to have our team and all the necessary pre-launch activities completed over the next few months, and we’re confident that this will be accomplished.

  • And now, Hollings will make some closing remarks.

  • Hollings Renton - CEO

  • Thanks, Ed.

  • This has been a remarkable time in our corporate history.

  • Six months ago, we didn’t know the outcome of the phase III analysis.

  • Now, we stand here just a few weeks after having completed the regulatory filing for a new oncology drug.

  • In the second half of the year, we will complete the U.S. launch preparations, make a European filing, present additional Sorafenib data, and, with Bayer, make decisions about a fourth registration path.

  • Onyx is in the early stages of establishing a U.S.-based oncology franchise.

  • Our first major step will be the approval of Sorafenib for patients with advanced kidney cancer.

  • We also expect Bayer to file for approval in Europe and other territories in the near-term.

  • Building on that success will be potential registrations in metastatic melanoma and liver cancer pending the outcome of ongoing pivotal phase III trials.

  • The third stage of our growth will be fueled by yet another possible registration trial in a large tumor type based on clinical data that is now being generated.

  • As Len mentioned, there will be updates in the fourth quarter for lung, ovarian, breast, prostate and other cancers, administering Sorafenib both as a single agent and in combination with various anti-cancer agents, including Avastin.

  • We and Bayer are in active discussions about the next registration trial, and we will update you as the program becomes more defined.

  • This is an exciting time and an exciting drug.

  • We believe that Sorafenib has the potential to become a significant component of the oncologists’ treatment regimens.

  • Our commitment is to build on the expanding clinical data set to establish a commercial oncology franchise for the benefit of cancer patients worldwide.

  • Thank you very much for your time.

  • We would now be happy to take questions.

  • Operator

  • [OPERATOR INSTRUCTIONS.]

  • Curtis Hawes of Summer Street Research.

  • Curtis Hawes - Analyst

  • Good afternoon.

  • I apologize if you mentioned this in your prepared remarks, but could you give us an update in the enrollment in the treatment protocol?

  • And then, second, could you give us an update on the status of the ECOG study?

  • That’s the six-arm study that’s looking at CCI779, Tarciva, Avastin and Sorafenib in the doublet combinations.

  • Hollings Renton - CEO

  • So, let me -- Curtis, let me take the first question.

  • We are not going to be providing routine updates on the enrollment.

  • We have a very broad, aggressive program in terms of both number of sites around the country, not just larger sites but also community-based sites.

  • The sites obviously have to have an IRB process, as well as the ability to run clinical trials.

  • But we have a large number of sites operating, and it’s going very well.

  • But we’re not going to provide ongoing updates on that.

  • On the second question, let me refer that to Len.

  • Leonard Post - SVP of R&D

  • Yes.

  • I think what you’re referring to, Curtis, is a protocol that ECOG is developing to -- I think it will be -- it could be a very interesting design in renal cancer, but that is a protocol that’s actively under development at ECOG, and it hasn’t started yet, and we’re really not in a position that we can comment on that right now.

  • Curtis Hawes - Analyst

  • OK, great.

  • And then, just a quick follow-up.

  • On the treatment protocol study, do you hope to submit that data to the FDA prior to the approval of Sorafenib, or is that just a study that you’re using to get patients on drug prior to the approval?

  • Leonard Post - SVP of R&D

  • Yes.

  • I mean, we do expect to learn things during the course of the expanded access program, but it’s fundamentally not a data-gathering protocol.

  • And although we’ll periodically submit data to the FDA, we don’t expect that that will be a significant part of the review of the NDA that was submitted in July.

  • Curtis Hawes - Analyst

  • Great, thanks.

  • Operator

  • Steve Harr with Morgan Stanley.

  • Hollings Renton - CEO

  • Hi, Steve.

  • Steve Harr - Analyst

  • I just -- we have two quick questions, (1) if you could give us an update in in-licensing (ph) plans, and (2) if you could give us a little more granularity on exactly where you are in terms of numbers of personnel for both sales and medical affairs hired to date, and I think you already gave us the total hire plan.

  • Thanks.

  • Hollings Renton - CEO

  • Yes.

  • Well, as I think most of you are aware, our focus as a company is on Sorafenib, both organizationally as well as financially at this stage.

  • And our view has been, although we’ve been looking at in-licensing and/or acquisition opportunities, and to be opportunistic, our view has been, to date, that, until we have launched Sorafenib, we don’t have an oncology franchise to leverage, so we want to make sure we get there and stay focused on those set of activities.

  • But we do have an overall longer-term corporate strategy of building a pipeline to leverage the U.S. franchise.

  • In terms of the staffing, I think Ed mentioned that we’re looking at having about 100 people in the field, 50/50 between Bayer and ourselves, so it’s 50 each between the sales and the MSLs.

  • In terms of the total size of the company, by the end of the year we’ll be about 100 employees.

  • Steve Harr - Analyst

  • Great, thanks.

  • Operator

  • David Witzke from Prudential Equity Group.

  • Hollings Renton - CEO

  • David?

  • Jason Zhang - Analyst

  • Hi, this is actually Jason.

  • Hi, Hollings.

  • Hollings Renton - CEO

  • Hey, Jason.

  • Jason Zhang - Analyst

  • Question.

  • Just wanted to get some of the clarification.

  • You have listed a lot of trials that is going on.

  • Let me just run through -- I want to get the right information.

  • The phase II RCC trials, Sorafenib versus the IFF, is that a second-line trial?

  • Hollings Renton - CEO

  • The Sorafenib versus Interferon trial is in previously untreated patients.

  • Jason Zhang - Analyst

  • OK, so that’s -- would be first-line.

  • And same as the second, a phase II (inaudible) trial in combination with Avastin, that was for first-line patients?

  • Hollings Renton - CEO

  • You know, that’s a good question, Jason.

  • I should know the answer to that, but, offhand, I don’t.

  • That’s a CTEP-sponsored study, and I don’t actually remember what the inclusion criteria for previous treatment was on that study.

  • Jason Zhang - Analyst

  • OK.

  • Just one question on the survival analysis.

  • I know that you have said you could do two analyses, one is based on events at the time of crossover.

  • You could also choose to do the overall survival analysis at NSL (ph) trial.

  • Sounds like you are making a decision now to do analysis at the time of crossover.

  • Is that right?

  • And also, could you -- you mentioned briefly -- I got onto the call a little bit late -- that, because of the crossover, the power of the trial would be different than what you previously (inaudible).

  • So, what are you really trying to get from this analysis?

  • Leonard Post - SVP of R&D

  • Well, you raise a good point about that we have confounded the survival analysis since the crossover.

  • Let me start out by reminding everyone that the NDA is filed based on progression-free survival, and we think that that demonstrates a clinical benefit.

  • And because we thought we had that demonstrated pretty well is why we decided to allow the crossover, and we got fairly broad agreement from our investigators and the FDA that that was an appropriate thing to do.

  • But having done that, from what we know about Sorafenib, we have every reason to expect that the placebo patients who go on Sorafenib will get some benefit out of that.

  • So, we don’t expect to see as big a difference in survival between the placebo arm and the drug-treated arm as we would have if we’d left those placebo patients remaining on placebo.

  • So, what we can learn is a little hard to tell.

  • We will have all of the data because we’re continuing to follow the patients.

  • We will know when the deaths occur on both arms, so we’ll have that data.

  • What we can learn from it, though, we’ll just have to wait and see.

  • It certainly reduces the expectation that there will be a statistically significant difference between the arms.

  • Now, as far as getting into exactly what analysis we’re going to do, I think that, at this point, we should probably defer that question till we have a little more to update you with at a later time.

  • Jason Zhang - Analyst

  • OK, thanks.

  • Operator

  • David Bouchey with RBC Capital.

  • Hollings Renton - CEO

  • Hi, David.

  • David Bouchey - Analyst

  • Stimulating but appropriately cautious quarter.

  • First question I would like to ask you is about clinical development.

  • You’ve got a pair of phase I trials, I believe, combining Interferon with Sorafenib, and will these be presented at the ECCO meeting in Paris the end of October?

  • Leonard Post - SVP of R&D

  • You’re right that there is more than one study combining Interferon with Sorafenib, and I don’t think we’ve made specific comments on which studies are going to be presented at ECCO yet.

  • David Bouchey - Analyst

  • OK, but there could be a study presented at ECCO?

  • Leonard Post - SVP of R&D

  • There are studies ongoing, and I think that’s probably as far as we can go right now.

  • David Bouchey - Analyst

  • All right.

  • How far can you go in terms of when we might expect to see some of this phase II data of Sorafenib head-to-head against Interferon in previously untreated patients?

  • Leonard Post - SVP of R&D

  • Well, that study is still ongoing, and we haven’t really given out a projected timeline on it yet.

  • David Bouchey - Analyst

  • All right.

  • And the last question is for Marilyn.

  • You’re telling us to expect about $100 million net loss, and, primarily, will that be coming from increasing in marketing and R&D?

  • And what would be driving the R&D, just clinical costs, or is there something else going into the R&D?

  • Marilyn Wortzman - VP of Finance and Administration

  • Yes, David.

  • Primarily, the first place expanded cost is in the marketing side, because all of the salespeople are coming on board in the second half of the year. and as we’re also preparing to launch the product, there are third-party marketing activities going on.

  • And then, on the R&D side, we expect increases because, in the first half of the year, we just initiated phase III trials in liver cancer, in metastatic melanoma, and also the ECOG melanoma trials.

  • So, those costs will be increasing as the year progresses.

  • Hollings Renton - CEO

  • And I think the other thing that we mentioned in the comments, David, is that these results were so robust that we made this unexpected decision to actually have an expanded access protocol.

  • And that’s going to be, as I said earlier, one that we are pushing very aggressively to maximize the opportunity for patients to gain experience and benefit from Sorafenib.

  • So, although -- that is a treatment protocol, and although, as Len said, there’s not a lot of data collection, you still need a CRO on that trial to manage the trial and to collect the data we will get out of that study.

  • So, those are all things that contribute to the increases in the second half of the year, obviously all of which are based on earlier and very positive results in renal cell cancer.

  • But again, renal cell is just the beginning.

  • We’re talking largely about what’s going on today.

  • In the U.S., we will be launching expanded access programs, in Europe, as well, making a filing shortly in Europe, so there will certainly be access and revenues being generated in Europe, as well as, then, going into the next stage with melanoma and HCC.

  • And then, as we look at data here in the second half of the year, this fourth registration path that we would expect to put in place.

  • David Bouchey - Analyst

  • OK, thanks.

  • Operator

  • David Witzke of Banc of America Securities.

  • David Witzke - Analyst

  • Hi, it’s Dave.

  • Question regarding the cost guidance.

  • How much of it is, or what percent is, like, one-time expenses that would not recur next year, or how much in million estimate?

  • Hollings Renton - CEO

  • Well, I mean, obviously we’ve looked at that.

  • We haven’t broken that out.

  • We will be providing some additional guidance as we get closer to 2006 about the expectations for 2006.

  • But you are correct in pointing out that some of these increases are ongoing increases, for example, the sales force.

  • That is an earlier expenditure, but it is something that will be ongoing next year, while some of these expenses are moving pre-launch expenses that we had originally planned for 2006 into 2005, which would not recur in 2006.

  • But again, we haven’t gotten into that level of detail, and, as we get closer to 2006, we’ll be updating guidance.

  • David Witzke - Analyst

  • And to confirm, did you say lung, ovarian, breast and prostate phase II data in the second half of this year?

  • Hollings Renton - CEO

  • Yes.

  • Those are some of the tumor types where we would expect to have data presented.

  • David Witzke - Analyst

  • Thank you.

  • Operator

  • Howard Liang of A.G. Edwards.

  • Howard Liang - Analyst

  • Thanks.

  • About the European filing, in the near-term, should we think of that as being this quarter, or before the end of the year? and what feedback have you had from--?

  • Hollings Renton - CEO

  • --Yes.

  • We actually -- we haven’t given exact guidance on that, but, as you know, this filing is on a common technical document, which is going to be available to be filed around the world.

  • So, obviously, the first filing, and the priority was to get it filed in the U.S., but we do have co-rappateurs, and we’re in the process of readying the filing in Europe, and it should happen in the not-to-distant future.

  • Howard Liang - Analyst

  • Have you had feedback from the EMEA about using progression-free survival as the end point?

  • Hollings Renton - CEO

  • We have ongoing dialogue around what will be considered for the registration there, and it’s progressing.

  • The dialogue is continuing and progressing in a satisfactory fashion.

  • Howard Liang - Analyst

  • Can you talk about the status, and, I mean, your thoughts on your Atrin (ph) program in RCC?

  • I would think that, with Sorafenib, it’s the tolerability and oral dosing that could be used.

  • Hollings Renton - CEO

  • That’s a good point.

  • Let’s -- Len, talk about that.

  • Leonard Post - SVP of R&D

  • Yes.

  • I mean, you’re right that, with the efficacy results and the safety profile of Sorafenib, very convenient dosing, it’s sort of an obvious fit for use in an adjuvant setting, and there is a lot of interest to do that.

  • And we’re -- most likely, as you know, adjuvant studies are big and they take a long time, so, most likely, we’d be doing that through some cooperative group mechanism, and we’re exploring those options right now.

  • Howard Liang - Analyst

  • OK, just a final question about -- going back to financials.

  • Can you talk about the contribution -- the size of the contribution from the expanded access program to the expenses in the second half?

  • Presume that that will go away once you launch Sorafenib?

  • Hollings Renton - CEO

  • Yes, that’s another one of those expenses that we didn’t even anticipate, and only occur pre-launch, that is, the patients would -- obviously will continue to get drug constantly, and, once they’ve -- have used their entire supply off of the expanded access program, would then move to commercial supply.

  • Operator

  • Geoffrey Meacham with J.P. Morgan.

  • Please go ahead, sir.

  • Geoffrey Meacham - Analyst

  • Hi, thanks for taking the question.

  • Just a further question on guidance, your expense guidance.

  • Does it assume any initiations for this year, pivotal studies in lung, breast, ovarian, prostate?

  • And the second part of that, does it assume any costs related to European commercialization?

  • Hollings Renton - CEO

  • In terms of the -- we will make decisions in the second half of the year about the -- as we said, the fourth registration path among the tumor types that you’d mentioned there.

  • It’s not likely to contribute to expenses significantly, and the study may not be started by the end of the year.

  • It may be early the following year.

  • The second part of the question -- Ed, you want to take that?

  • Ed Kenney - EVP

  • Yes.

  • The answer to the second part is, yes, there is -- there are expenses associated with the acceleration of the expected filing in Europe that are in this year’s expenses, just as there are a number of U.S. expenses there, too.

  • Geoffrey Meacham - Analyst

  • And a follow-up to the -- it’s an earlier question just about the venues for data release.

  • Can we assume, at least, that abstracts have either been submitted or accepted to any of the fall meetings?

  • Julie Wood - VP of IR and Corporate Communications

  • Yes.

  • The two meetings in the fall are the ECCO meeting, which will be in Paris, and those abstracts have been submitted, and people have been notified.

  • In terms of the EORTC, which is going to be in Philadelphia this year, the abstract deadline is early September.

  • Geoffrey Meacham - Analyst

  • OK, thanks.

  • Operator

  • Han Li with Suntrust.

  • Han Li - Analyst

  • Yes, just a couple of housekeeping questions.

  • One is, what’s the official Fiduca (ph) date for the Sorafenib?

  • Hollings Renton - CEO

  • Well, we won’t know that until we know -- get feedback on whether the application has been accepted, and whether it’s been granted priority review, and that’s -- they have 60 days to let us know.

  • Han Li - Analyst

  • I see.

  • OK.

  • Hollings Renton - CEO

  • That would be -- we would know by early September the status of the application.

  • If we got priority review, the Fiduca date would be early January.

  • Han Li - Analyst

  • OK.

  • And second question regarding your programs.

  • Can you give us some details on the current company-sponsored programs of Sorafenib in lung cancer, breast cancer and others?

  • Hollings Renton - CEO

  • Len, you want to comment?

  • I mean, there are a range of trials underway.

  • Leonard Post - SVP of R&D

  • Yes.

  • Han Li - Analyst

  • Like for lung cancer.

  • Leonard Post - SVP of R&D

  • For lung cancer, there is a company-sponsored single-arm phase II single agent study that is pretty far along.

  • Han Li - Analyst

  • (Inaudible) refractory?

  • Leonard Post - SVP of R&D

  • Yes, yes, and there’s also -- was presented at ASCO an Iressa combination study.

  • At ASCO was an example of lung cancer patients being enrolled in phase I studies.

  • The Japanese phase I had several lung cancer patients there. and we have lung cancer patients on some of the combinations.

  • So, those are the -- that’s the various sources of data that we have coming in on non-small cell lung cancer from company-sponsored studies, and the way you ask the question, it sounds like you also realize there are activities going on that are NCI-sponsored.

  • ECOG has a randomized discontinuation study, and CTEP-sponsored study, as well.

  • So, there are a variety of sources of information on lung cancer.

  • Han Li - Analyst

  • OK.

  • Just on the company-sponsored lung -- on the breast cancer program?

  • Leonard Post - SVP of R&D

  • There’s a company-sponsored phase II study in single-agent, single-arm study in breast cancer.

  • Han Li - Analyst

  • What stage?

  • Leonard Post - SVP of R&D

  • That’s also advanced patients, and the study is pretty far along.

  • Han Li - Analyst

  • OK, thank you.

  • Operator

  • Ron Ellis with Leerink Swann.

  • Ron Ellis - Analyst

  • Hi, thanks for taking the question.

  • Just wanted to follow up on the survival analysis that you were mentioning.

  • Curious, Len, how much of the -- in the discussions with the FDA are -- being considered now maybe some post-hoc analysis that you’re waiting till you find the best way to interpret the data?

  • I would think that you would have had to have made some initial plans with the FDA on how you were going to interpret this analysis prior to doing the crossover.

  • I mean, wasn’t there something made, and exactly what are you trying to discuss now with the FDA in terms of a revised analysis?

  • Leonard Post - SVP of R&D

  • Well -- and like I said earlier, it’s premature to get into the details of exactly what formal analysis we’re going to do, but you’re pointing out an important distinction, Ron.

  • We will have the data and be able to make cuts along the way to try and learn what we can about survival, but there are also formal -- you can’t just look every day and pick the analysis that you like the most, so it does require pre-specification on when formal analyses are going to be done.

  • So, that is something that has to be part of the plan, although, in the end, we’ll have data, and we’ll learn what we can from it.

  • Hollings Renton - CEO

  • And just to re-emphasize, the application is based on progression-free survival, although what data we supply to the FDA on survival itself will be considered by them at the appropriate time.

  • We recognize that survival data could be important for other purposes, and, as Len suggests, there’s a variety of ways to look at that data.

  • Ron Ellis - Analyst

  • OK.

  • Any sense of when a final analysis would be available?

  • Is that ASCO ’06?

  • Leonard Post - SVP of R&D

  • I think it’s too early to be putting out projections like that.

  • Hollings Renton - CEO

  • OK.

  • Thank you, everybody, for joining us this afternoon.

  • I know that Julie will be available for follow-up calls, and can direct any question to any of us that’s appropriate, so, we, again, appreciate your interest, and we’ll keep you informed.

  • Thank you.

  • Operator

  • Thank you for your participation in today’s conference.

  • This concludes your presentation.

  • You may now disconnect.

  • Good day, everyone.