美國安進 (AMGN) 2005 Q3 法說會逐字稿

Good morning, my name is Marcus and I will be your conference facilitator. At this time I would like to welcome everyone to the Onyx Pharmaceuticals third quarter financial results conference call. [OPERATOR INSTRUCTIONS] Onyx Pharmaceutical, you may begin your conference.

Thank you for joining us this morning. I’m Julie Wood, Vice President of Investor Relations and Corporate Communications at Onyx Pharmaceuticals. During the call we will review our third quarter financial results that were released yesterday afternoon. In addition, we will provide an update on our ongoing pre-commercial activities, as well as briefly review the clinical data that was presented at the thirteenth European Cancer Conference, or ECCO, this week.

Please note that this call, being held on November 3, 2005, 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.

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 third quarter results. Marilyn will also spend a few minutes describing how we anticipate our P&L statement will be structured once Onyx begins recognizing revenue. Following Marilyn, Hank Fuchs, our Executive Vice President and Chief Medical Officer, will summarize some of the clinical data presented at ECCO. Subsequently, Ed Kenney, our Executive Vice President and Chief Business Officer, will provide an update on our pre-commercial activities. Finally, Hollings will make some closing comments before opening up the call for questions and answers with the management team. During this time, Leonard Post, our Senior Vice President of Research and Development will also be available.

Before beginning I would like to make a comment about logistics for today’s teleconference. While we don’t anticipate any difficulties during the call, we are broadcasting simultaneously from Paris and California, so please bear with us if we experience any momentary telephonic delays.

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. Reference 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 third quarter report, which will be filed with the SEC by November 9, 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. Before beginning our prepared remarks, I would like to remind everyone that last week Bayer and Onyx announced the selection of Nexavar as the global trade name for sorafenib. I would now like to turn the call over to Hollings Renton.

Thank you Julie.

In the third quarter we continued a rapid pace of development for Nexavar. As you know, our goal has been, and continues to be, to get Nexavar to patients and physicians as soon as possible. We’ve been extremely pleased that the speed of these activities has accelerated our pre-launch preparations from 2006 into 2005.

Let me review a few of the key third quarter milestones. In July Bayer and Onyx completed the U.S. filing of Nexavar for the treatment of patients with advanced kidney cancer. A European filing in the same indication was completed in September. Importantly, also in September, we heard back from the FDA that our dossier had been accepted, and that it was granted priority review status. This means that the agency’s goal is to complete its assessment of the submission within six months of the date that they received the dossier.

Based on this timeframe, we should have an action by mid January 2006. However, as we have commented previously, both Onyx’s and Bayer’s commercial organizations are fully prepared to launch Nexavar should we receive a favorable early review. To this end both companies have completed the build out of our respective sales, marketing and medical affairs teams. Ed Kenney will provide the latest details of these preparations in his remarks. He will also comment on the expanded access study, which has made Nexavar available across the country prior to its possible commercialization.

As you know, we have continued to provide clinical and scientific data at appropriate conferences. This week we had several Nexavar updates presented at ECCO. Earlier today Dr. Bernard Escudier reported a favorable trend in overall survival based on an interim analysis from the ongoing Phase III trial in patients with advanced kidney cancer. Hank, whom I will introduce more fully in just a moment, will summarize those data later in the call.

The growing body of clinical data is critical in guiding and shaping our future trial activity. We believe that our work in kidney cancer is only the first step in demonstrating Nexavar’s potentially wide application in a number of different cancers, and we look forward to generating the data to support that premise. Data will also be reported at the AACR, NCI, EORTC international conference on molecular targets and cancer therapeutics being held the week of November 14 in Philadelphia. We are also moving forward with plans to initiate a pivotal Phase III study in a large tumor type in the first half of next year.

On the management side, we made an important addition to the executive team in hiring Dr. Hank Fuchs as Executive Vice President and Chief Medical Officer. Hank, while at Genentech, led the clinical team in the registration of Pulmozyme, and redesigned the Herceptin study that led to its approval. Hank joins us from IntraBiotics, where he was most recently Chief Executive Officer.

Given the increasing size and investment in our clinical program, we had known for some time that we wanted to add a senior R&D executive with extensive clinical and managerial experience. With Hank joining the group, it also gives us an opportunity to integrate the clinical and medical affairs capabilities under his leadership, though these individual functions will remain under the capable direction of Dr. Scott Freeman and Dr. Fabio Benedetti respectively.

Having a cohesive and comprehensive clinical program is key to supporting and extending the use of Nexavar, and we believe that Hank, working closely with our other clinicians, and with Bayer, will lead this integrated team to the next level of effectiveness. Nexavar is a promising oncology compound, one that we believe will be the foundation of a U.S. oncology franchise for Onyx, as well as a product that will be used worldwide. In addition to the filing now under review at the FDA, Bayer has filed for the same indication in Europe, using a common technical document that is also being utilized as part of a global registration strategy. Additionally, Bayer and Onyx have pivotal studies ongoing in metastatic melanoma and advanced liver cancer, and we anticipate continuing to broaden our clinical program.

Nexavar is an important asset that we will fully support, and fund, in order to maximize its value for patients and shareholders alike. Now I will turn the call over to Marilyn Wortzman to discuss our third quarter financial results.

Thank you Hollings.

Onyx reported a net loss of $22.6 million or $0.64 per share for the three months ended September 30, 2005. In the third quarter of 2004 Onyx reported a net loss of $11.3 million or $0.32 per share. Onyx reported no revenues during the third quarters of either year.

R&D expenses for the third quarter ended September 30, 2005, were $14.8 million. This compares to $9.2 million in the same period last year. The increase in R&D expenses in 2005 reflects higher clinical expenditures due to an increased number of trials, including Phase III studies in metastatic melanoma and advanced liver cancer, initiated in the first half of this year, as well as expenses associated with the expanded access program for individuals with kidney cancer.

Marketing expenses were $6.8 million in the third quarter of 2005. this compares to $859,000 in the same period last year. This increase was due to hiring sales force, the medical affairs team, and third party activities in anticipation of the possible commercial launch of Nexavar in the U.S. by mid-January 2006, pending a favorable FDA review. Marketing expenses are expected to continue growing significantly as we prepare for potential product launches in the U.S., Europe, and other parts of the world.

General and administrative expenses were $2.4 million in the third quarter of 2005. In the third quarter of 2004 general and administrative expenses were $2.1 million. We anticipate G&A expenses may increase modestly to support the needs of the organization.

Interest income was $1.5 million in the three month period ended September 30, 2005. This compares to interest income of $910,000 in the comparable period of 2004.

At September 30, 2005 we had cash, cash equivalents, and marketable securities of $172.8 million, as compared to $209.6 million at December 31, 2004. This includes a $10 million creditable milestone payment received from Bayer in August as a result of filing the NDA. The final milestone advance of $10 million will be paid following the U.S. approval of Nexavar.

At November 1, 2005 we had 35.4 million shares outstanding.

As we have indicated on previous calls, we expect expenses overall to continue escalating in the fourth quarter as we prepare for the possibility of a commercial launch, and as we continue funding our extensive clinical program.

We are reiterating our previously stated guidance for a net loss of approximately $100 million for 2005.

Before concluding my remarks, I would like to share in a bit more detail than I did during the last call, our current thoughts on the structure of the P&L at the time we begin recognizing revenue. Subject to final agreement with our external auditors, and upon receiving FDA approval, here is some early guidance on the structure of our financial statements.

As noted previously, we anticipate that the Onyx P&L will be reported in a fashion similar to other co-promotion arrangements in the industry. On the face of our P&L we will show one line item for unconsolidated joint business revenue. This line item will include three components; one, our share of co-promotion profit; two, reimbursement of Onyx’s expenses by Bayer; and three, when applicable, royalties from Japan.

The first component of our revenue, our share of co-promotion profit, will be determined in the following manner; product revenue less total shared expenses, including cost of goods sold, and distribution costs; marketing expenses and R&D expenses to arrive at the co-promotion net profit. The co-promotion net profit will then be split 50/50 in the U.S. In the rest of the world, excluding Japan, our profit amount will be somewhat less than 50%.

The second component of our revenue will be reimbursement by Bayer for Onyx’s share of expenses used in calculating co-promotion profit. The third component of our revenue will be any royalties earned for the period. It is the sum of these three numbers that we anticipate will be reported as Onyx’s unconsolidated joint business revenue. The expense portion of our P&L will include only the Onyx incurred expenses.

One additional note, remember that our retainment of milestone liabilities to Bayer will not flow through our P&L, but rather be recorded as a reduction of cash. I’d now like to turn the call over to Hank Fuchs for a review of the Nexavar data presented at ECCO.

Thank you Marilyn. Since joining Onyx in September I’ve been impressed by the scope of the clinical program, and the capabilities of the existing team, and I’d like to thank Hollings for the opportunity to join Onyx, and also thank Len for Len’s leadership and support as I come up to speed.

I made the decision to come to Onyx because of Nexavar for the opportunity to help establish an oncology business with Nexavar at its nucleus. As one of the initial steps in that process, we need a broad clinical program to investigate fully the compound’s potential application across tumor types, both as mono-therapy and in combination with other anti-cancer therapies.

Already this ambitious plan has spawned more than 50 clinical trials, either sponsored by the companies or through outside sponsorship. In addition, we are beginning investigator initiated trials, aimed at studying new ways that Nexavar might be used for the benefit of cancer patients. With such an extensive program, it is important to work closely with Bayer as well as with the clinical community.

While the majority of my time today has been spent reviewing the existing program in planning for future trials, my priorities include continuing to strengthen the relationship with our collaborator Bayer, as well increasing the overall effectiveness of the clinical program.

As Hollings mentioned earlier this morning, at the ECCO meeting in Paris, Dr. Bernard Escudier, co-primary investigator of the phase III target kidney cancer trial, presented an update of the trial, including an interim analysis of overall survival. This analysis, which included the 220 deaths that had occurred as of May 31, 2005, was conducted while the study was ongoing, based on events that occurred prior to the decision to allow placebo patients to cross over to receive treatment with Nexavar. The final survival analysis, which is planned for 540 events, is not expected for some time.

During this presentation, Dr. Escudier reported that there was a 39% improvement in survival for Nexavar treated patients. Or said another way, the risk of dying during the measurement period, was reduced by 28% for Nexavar treated patients as compared to those patients receiving placebo, with a P value of 0.018, and a hazard ratio of 0.72. At the time of the analysis, the median survival of patients treated with Nexavar had not yet been reached, while the median overall survival for patients who received placebo was 14.7 months.

Although statistical significance has not been reached, since the protocol specified monitoring boundary at the 220 death interim analysis required a P value of less than 0.0005, these results suggest a favorable survival tend for patients who received Nexavar. Patients will continue to be followed and we look forward to further analyses of these very exciting data.

In addition to Dr. Escudier’s presentation on the phase III renal cancer study, there were 10 other talks or posters on Nexavar, the majority of which came from externally sponsored studies. Building on the track record of combinability of Nexavar, two presentations, one by Dr. Robert [ph], of the Institut Gustave Roussy and another by Dr. Valed O’Duke [ph], indicated that Nexavar could be combined with Albeterfuron [ph], a commonly used agent in the treatment of renal cancer. We are encouraged by the preliminary activity seen in these early stage trials, though recognizing that these have only included a small number of patients.

We also have a third study underway that will provide additional information about this combination. In addition, Dr. Posatus [ph], of the University of Chicago, presented early data on the combined administration of Nexavar and Avastin. The theory is that by combining two anti-angiogenic agents, you may be able to hit the same target twice, obstructing the VEGF receptor in binding circulating VEGF. In combining the two agents, we are in effect doubling the efforts to starve the tumor by creating a more complete VEGF block.

This additional study was designed to assess whether the two agents could be safely combined, and if so, at what dose. Dr. Posatus reported on 12 patients with a variety of solid tumors, though the majority of these patients had ovarian cancer. Based on the results, Dr. Posatus recommended an accommodation dose consisting of 200 mg of Nexavar, administered orally twice daily, with 5 mg of Avastin, administered intravenously ever other week.

Of the 12 patients, there were two partial responses as measured by resist criteria, and nine patients with minor responses or stable disease.

It appeared that there was some potential for disproportionately greater toxicity experienced in patients treated with the combination than would be expected with treatment by either agent alone. The study will continue and the national cancer institute has begun another trial to look at the combination of Nexavar and Avastin, this time in patients with renal cancer.

Speaking personally, I’m very pleased to be at Onyx, to lead the comprehensive development of one most exciting cancer compounds in development. With Bayer, we have made significant progress since Nexavar first entered the clinic in 2000, and I believe we have much more to achieve as we fully tap Nexavar’s potential.

Now I will turn the call over to Ed Kenney.

Thanks Hank. In the third quarter, we and our partner Bayer completed the build out of the joint shield organization, including the hiring of all the territory representatives and the medical affairs team, or the MSL. One of the key activities of the MSL has been to disseminate information about our expanded access program, also known as the ARKS trial, being conducted in the United States.

Though it was announced fewer than six months ago, the program has provided access to Nexavar for over 1,000 patients in roughly 200 locations throughout the country. This program is allowing advanced kidney cancer patients to receive Nexavar, while permitting oncologists to gain first-hand experience with the efficacy and tolerability of the drug. We believe this hands-on experience with Nexavar is an important component of awareness building in the U.S. market.

Bayer and Onyx are also engaged in a number of pre-commercial activities. These have included extensive sales training activities. In fact, both field forces now have completed their initial product training, as well as a comprehensive medical education program and a global positioning and launch campaign.

Since June, we have jointly sponsored more than 50 medical education programs that have been attended by over 2,000 physicians. Additionally, we are in the process of preparing core launch materials and expanding our medical education outreach with an extensive speakers’ program, utilizing key opinion leaders. At the same time, we’re putting in place a program to facilitate reimbursement and distribution of Nexavar to patients.

The commercial team members came to Onyx and Bayer because of the promise of Nexavar and the challenge of building an oncology business from the ground up. And, we’re busy with preparatory activities aimed at doing just that. The sales team is diverse. Just on the Onyx side, they represent experience gained at 18 therapeutic oncology companies.

Similarly, our equally experienced marketing group has been involved in a number of significant pre-launch activities, primarily directed at medical education. We believe that the renal cell market is undergoing some fundamental changes and we expect to help shape that change. All of this work is designed to move Nexavar quickly, once it’s approved, to the forefront of doctors’ minds and into the hands of patients.

OK, thanks Ed. We’ve already achieved the most important 2005 goal that we set for ourselves, filing the NDA as quickly as possible. And we have heard from the FDA that our dossier was accepted and granted priority review status. Now, we have the commercial team in place and are poised to go as soon as might hear something from the agency.

At the same time, Bayer is actively pursuing registrations worldwide with the filing of an application in Europe in September, and other filings pending. In addition, an expanded access program, similar to the U.S. program, is now beginning at multiple European sites. The efficacy of Nexavar has been established in the largest randomized trial ever conducted in advanced kidney cancer. With compelling clinical and statistical significance, this agent doubled progression-free survival and investigators have now reported a favorable trend in overall survival, based on an interim analysis. We are encouraged by these initial survival findings.

In addition, patients and their doctors are also reporting that Nexavar is well tolerated and has a predictable and manageable side effect profile. We believe that this data supports our conviction that Nexavar will be an exciting new product in oncology.

I look forward to talking to you more once we receive word from the FDA on their action on our filing. Thank you for your time. We’d be happy to take questions now.

[OPERATOR INSTRUCTIONS] Steven Harr, with Morgan Stanley.

Good morning guys. I want to get a little bit better sense of the survival data and the expected impact of those you have in the market place. First of all, do you expect that this interim analysis will in any way impact physicians? And, do you plan to publish it?

Second of all, as you look at the confidence levels around the data, how close are they to overlapping, and would you expect these curves to come together now over time, given that now [inaudible] non-treatment.

I’m going to refer that to Hank.

Hi Steve. On the question of what the impact of what the interim survival analysis on physicians will be, maybe I’ll start with the medical half of that and get Ed to help me on the commercial half of that.

Obviously one of the most important things that physicians want to try to do is prolong the life of their cancer patients. So on that level I think survival data is probably the most important thing that can be provided. We’re very encouraged because today’s findings, as reported by Dr. Escudier, are a favorable trend in the direction of sorafenib. Obviously we can’t comment on publication plans or predict the future of the final analysis, but we are very encouraged. Ed do you want to comment on the impact on physicians in the marketplace?

I think it’s fair to say that we can only describe it at this point as a favorable trend, because in fact the statistical rules that we are bound by, but it remains to be seen exactly how that will get taken up in the marketplace, and how physicians that are actually faced with treating patients will interpret it.

What was the median follow up of patients in the trial? I know you said that you have not reached [inaudible] what was the median follow up?

We haven’t presented that, Steve.

All right. Is it fair to say that a 39% improvement if things are going to play out, would need five months [inaudible] overall survival?

Again that’s predicting the future, and because we haven’t observed median survival in the sorafenib arm we can’t tell you something that’s unobserved minus 14.7 months is going to be.

And it’s even more complicated than that, because remember, this analysis was done right before the patients on the placebo arm started crossing over to drugs. So it makes it even more difficult to predict the future when the treatment of the placebo patients has changed by the time the next analysis occurs.

But you would expect these curves to come back together somewhat over time I would think.

Well based especially on the fact that patients were allowed subsequently to get sorafenib.

All right, thank you.

Howard Liang with Leerink [ph] One.

You mentioned other territories, can you talk about what these are, would this include Japan?

This is really a worldwide common technical document that’s being pursued in multiple territories as quickly as they can get it in front of other regulators. We haven’t actually given an update on a territory by territory basis, but there have been multiple filings outside of Europe as well.

OK. Is there a change to the final survival analysis? I think there was a plan to talk to the FDA and to change the physical plan for the final analysis.

The statistical plan with the FDA has the same final 540 event survival analysis with a P value of .04.

So that would be the next survival analysis that we’ll see?

Well we haven’t commented on any other data that we may be generating and having dialogue with the FDA about.

OK. I know you said this would be in the future, but any rough idea on when that might occur, the final analysis?

I think it’s hard to predict. Obviously we had only 220 deaths as of May, it’s going to be at least toward the middle of next year I would think.

Then if I could ask, your ERTC presentation, can you align what you might present?

Julie, we don’t have any, yet, visibility of the abstracts that have been accepted there, do we?

No, we have not shared publicly the extent of data that will be presented at the triple meeting.

We do have multiple abstracts that will be presented, but we withhold that until the ERTC has published that.

Thank you.

David Bouchey with RBC Capital Markets.

I may have missed this, but did you tell us what the actual median survival data was in months?

We said what it was for the placebo group, which was 14.7 months, but we said that a median has not yet been reached in the sorafenib Nexavar treated patients. So therefore we can’t calculate a difference between the two groups.

In terms of the data for showing combinability for interferon, can you give me a little bit of color on what you think here, in terms of the response rates that you’re seeing, as well as the ease of the combinability and what that might mean in the marketing of your drug in kidney cancer patients.

Maybe I’ll start, and I’ll ask Len to help as well. There have been two relative small studies that have looked at Nexavar in combination with interferon, and although we see shrinkage of tumors in patients, I do want to point out that we are uncertain as to what the best measure of effectiveness of Nexavar really is. In fact we’re really encouraged by today’s finding of prolongation of overall survival, because if that’s the best measure of Nexavar’s benefit, that’s certainly best for the patients. So we’re encouraged by what we’ve seen with interferon combinations from an efficacy perspective, in terms of tumors changing size, but it’s still very much early days.

We have observed that to maintain patients’ combination of Nexavar and interferon, that the doses of the drugs must be reduced. I think about half of the patients required dose reductions of one or both of the agents. With that though the agents do seem to be tolerable when given in combination, and a number of patients have stayed on therapy for a number of cycles. Len, do you want add anything?

No, I think that sums it up pretty well. They are small studies, so it’s hard to draw a lot of efficacy conclusions, other than they do see activity, and pretty encouraging activity, and Dr. Robert pointed out that he felt confident that the two agents could be combined, so they know how to study it. There is a third study that’s ongoing, so we’ll get more information on this combination.

One last question for Ed. The expanded access program that you’ve started in Europe, how many sites do you plan on opening, and will they be just in the EU, or will they include non-EU European countries?

Right now I believe the plan is to contain it to the EU, because there’s actually a mechanism in place whereby we can do that; rolling it out beyond that I really can’t comment on. I don’t know that there’s a target number of institutions, we had some pretty rough targets in the U.S.; so much of this is dependent upon how long your dossier is under review. The longer that period is, then the longer the accrual and the higher the number of institutions.

OK thank you.

Jim Birchenough with Lehman Brothers.

A couple of follow up questions; just on the ongoing survival analysis in the renal cell trial, should we expect at some point to get a median survival number for patients who have just received sorafenib, or is it going to be confounded by the addition of patients who previously had placebo? I’m just wondering if we’re going to have a pure median survival number for patients just having received sorafenib.

I think that’s possible. I mean we’re going to report the intention to treat analysis of patients after receiving sorafenib. Again without getting into specifics about what’s to be contemplated for a publication for which the final data has not been assembled, obviously when we get to the end of this the challenge that we’ll all have is interpreting the two curves given that placebo patients will have been allowed to have received sorafenib. So with that caveat we think we’ll be able to have enough sorafenib observations in the future that we’ll be able to construct a sorafenib survival curve.

OK. Then just on the expanded access program, do you have some sense of what percent of patients, of the 1,000 who’ve received Nexavar, are front line versus second line?

We have that data, but we haven’t actually presented that at this stage. At the appropriate time we can provide some updates on that program. We just outlined it very briefly here, that’s all we’re prepared to do at the moment with well over 1,000 patients in 200 sites. But the breakdown of patients and what data that we’re collecting will have to await another call.

OK, just a final question and I’ll jump back in the queue. On the P&L on the contribution of the R&D reimbursement that you get from Bayer, do I understand that that is the excess that you’re paying in R&D over what Bayer is paying?

No, I think what Marilyn was outlining was that in the future, that is once we get to product sales, since we will be recording our share of the co-promotion profit, which includes a deduction for all of the R&D, both the R&D at Bayer as well as the R&D at Onyx, that we will show in our expenses our R&D and then a revenue line to cover half of the R&D that was attributable to this product.

OK great. Thanks.

Phil Nadeau with SG Cowen.

Hi, good morning. Congratulations on the data. My first question is actually this morning’s data, was it presented this morning, or do you have an idea what subsequent therapy was given to each of these arms? Were patients allowed to roll on to Avastin or some other agent, and if so, do you have the data of how that compared between the two arms?

We haven’t actually collected that data, or analyzed that data I should say, at this stage. We will ultimately have that information available and will be able to do the analysis, but have not done that at this stage.

OK, and the analysis was done on the first 220 deaths, presumably there are more placebo deaths in this group than there were sorafenib deaths. How many from each treatment group are included in the analysis?

It’s 123 in the placebo group and 97 in the sorafenib group.

OK. My next question is actually on the P&L. Presumably, one of the more important things to model on the P&L will be to get an idea of the SG&A and R&D that’s going to go into the joint venture. Will you provide the joint venture or collaboration based guidance? And, will there be a collaboration P&L that’s also reported when you report your sales?

I don’t know that we’ve talked about what the additional support, other than what Marilyn has provided, in terms of the co-promotion profit. I don’t now that there would be a separate P&L broken out. I think it’s too early for us to say there.

It’s also, I think, premature for us to give guidance. Obviously, just in general terms, looking ahead to the overall pattern, this is really the first quarter where we’ve had the entire commercial organization in place. And, that’s obviously for only part of the quarter. So next quarter will really be the first quarter in the United States, where we have the full complement of folks in the U.S. And then, as you know, having filed now in Europe, Bayer is beginning to add commercial capabilities in Europe as well, which will be added throughout 2006 in anticipation of the launch in Europe. So, those expenses will continue to go up.

And then on the R&D side, as you know, we have been investing heavily in the product and do not look for those expenses to decline in the near term.

I think that, as we get more through and into 2006, we can begin to provide some more general guidance.

OK, and my last question is actually on the timing of the approval. Hollings, in your prepared remarks, you mentioned, at least two times, that Bayer and Onyx would be ready to go should the approval come earlier than the PADUFA date. I’m just curious, what’s behind those comments? Is there any—[inaudible-two people talking]--.

I think, number one is, and we can’t, in any way, say that there’s anything that we can be assured of, other than there is a PADUFA date. However, having obviously pushed very aggressively to get the product through the development cycle for renal cell, and Bayer made the decision that we needed to have mainly investment in the commercial and not to have that to be rate limiting in case there were an early action, and obviously we can’t comment on anything until that happens. And whether it does happen or not, it’s really a question of the dialog with the FDA.

Could you comment whether you’re in labeling negotiations now?

We really pretty much don’t give a blow-by-blow, as you know, Phil, on that. And we’ve had a good working relationship with the FDA, and we’ve provided them all the data, including the survival data that was highlighted today as a part of the application, and the dialog is very productive, and we’re continuing.

Fair enough, thank you.

Chris Demotropoulas [ph], J.P. Morgan.

Good morning. A quick question here, could you kind of go over the body of clinical data in the lung cancer program thus far?

Well, the lung cancer data is really evolving. There have been and will continue to be some presentations of that data, but really today’s focus is on things that were presented here at ECCO. And you’ll see data upcoming in that tumor type as well, as well as in other tumor types we have highlighted, with the investment community and including on this call. But there will be a fourth pivotal plan, but we have not announced even a selection of that indication at this stage.

Sure. You also provided an update on how many docs will be targeted with the Nexavar launch and, once again, how many reps will be in the U.S. to support that launch?

Actually we’re not comfortable putting those numbers out there right now. I can say, though, that the analysis and the thought process that went into it was very extensive. It went on for several months, both in terms of sizing the force, in terms of how many people are out there from the sales side, how many people are out there from the medical affairs side, where they’re located and how they interact with each other. It’s the whole issue of having two partners in the space at the same time is one that we very thoroughly analyzed and we reached conclusions that both partners were happy with.

What we have said in the past is just general guidance that the combined organization in the field is now approximately 100 people.

OK, great. Thanks.

Julian Baker, Baker Brothers Investments.

Hey Hollings, how are you? I just wanted to follow up on one of the previous questions on understanding that you can’t make a forward looking prediction, could you respond to a scenario that definitely won’t happen, just to kind of frame out the possibilities? If everyone who had originally been randomized to drug were to die, you know, today, tomorrow, very soon, which obviously won’t happen, but if that were to happen, can you give us an idea of what the magnitude of the difference in survival would be between that arm and the arm of patients who were originally randomized to the placebo?

I don’t have that; I couldn’t answer that question right now.

I think we said 220 events. There’s obviously a large number of patients that have been censored, so you can’t really begin to make that projection, I think, at this stage.

I think we just have to wait to see how it plays out.

So, can you put this 39% Delta into some context? I’m trying to understand--I’m sort of just trying to understand what that--how to interpret that?

I’m not sure what kind of context, but, you know, for example, the 39%, just to be clear on what that is, is that’s the inverse of the hazard ratio. And the hazard ratio is the risk of dying on sorafenib divided by the risk of dying on placebo. [Inaudible-two people talking]-Sorafenib reduces the risk of dying 28%, 1-minus.72.

And the opposite of that is 1 divided by .72 is a 39% increase in the probability of surviving while on sorafenib. So, we’re talking about a hazard ratio of .72. The hazard ratio, if you say put it in context, I looked it up recently. I think the hazard ratio of the survival benefit from Avastin in front line colorectal is, I think, .66. So, this is renal cancer, a much tougher cancer and this is not a therapy.

So, I think a part of the reason that clinicians are encouraged in this setting is because they’ve seen the efficacy of powerful target therapies and dimensionally seen comparable results, with the caveat that, you know, I just gave you an example from a different tumor type in a different treatment strategy. And, this was only an interim analysis. But to give you a flavor, dimensionally, for context, that’s one way of looking at it.

OK, so it doesn’t speak, really, to the absolute difference between the arms? It’s just the hazard ratio as of May, 2005?

That’s correct, and it’s just so difficult. You know, as Hollings pointed out, there are 700 censored observations in the data. So, you know, based on 220 predicting accurately what’s going to happen in the next 700 is why you have these high statistical hurdles for proof.

OK, and so, just to follow up on that bit of it, Hank, this statistical hurdle, or maybe Hollings, this is a question for you, I don’t know, was that hurdle basically something that was pre-specified before the interim analysis was run?

Absolutely.

And one other question--.

I think it’s the standard approach if you have a final analysis plan that has the P value of .04, if you do an interim look, there’s a very high hurdle that one has to achieve. And to do that with 220 events would have been asking a phenomenal amount out of the drug.

And just one other clarification, if the drug is approved, before statistical significance is achieved on survival, either because it was never achieved or because you just haven’t gotten enough events yet to run the final analysis, is it probable that this survival trends data will not end up, pretty much couldn’t end up in the label for the drug?

We can’t speculate about the label or comment on discussions about the label, as you might guess.

OK. Thanks guys.

Jim Birchenough, with Lehman Brothers.

HI guys, I just wanted to follow up on Julian’s question. At the 14.7 month time period, where you had a median for the placebo group, what percent of patients were still alive on sorafenib? Presumably there were some survival curves presented by Dr. Escudier, I didn’t see them. But off those curves, what was the percent of patients that were still alive?

Eyeballing it, maybe 60%, of the sorafenib group. I guess I’d encourage you to get the data from—[inaudible-two people talking].

Julie, I guess the question is, when will the slides be up on either our website or a website that folks could take a look at? Because then they can do the interpolations.

I have to talk to Dr. Escudier and get a copy of his presentation, but we’ll get those available as soon as we can.

OK, great. Thanks.

[OPERATOR INSTRUCTIONS] Han Li, with Suntrust, Robinson Humphrey.

Yes, good morning. Just a quick question; I joined late. Forgive me for the question, so very [fast]; a quick question on your update on the front line study in kinases, the mono-therapy sorafenib against Interferon. I need an update on the time line and also patient [enrollment].

We actually haven’t given a status report on that. As you recall, it’s a study that involved over 100 patients, with PFS as the primary end point there. But we have, actually as you probably know, we get the data out when it’s there, as opposed to putting time lines on it.

OK, thanks.

David [Chen], with Jensen.

I don’t have a question, Just as a public service, I wanted to let you know, on the Bayer website, under the investor relations tab, the survival curves are actually on there. It doesn’t sound like a lot of people have found it.

OK, well thanks for the information.

It looked good [inaudible-two people talking].

Just to repeat that, our colleagues at Bayer are faster than we are, here in Germany, so they’ve already got that up on their website. So, to refer you, it’s Bayer.com, I think it is.

Right.

At this time you have no further questions and I would like to turn the call over to Hollings Renton.

No further questions? OK, well then thank you everybody for joining us. As you know, most of us are in Paris. Julie will be available back on the west coast for any questions that you have, and if she needs to contact us, she can. Again, we are encouraged by this update of the data in renal cell, as well as a range of other publications that have occurred this week. We continue very enthusiastically and thank you for your support. Take care.

This concludes today’s conference. You may now disconnect.