美國安進 (AMGN) 2005 Q4 法說會逐字稿

Good afternoon my name is Rocky and I’ll be your conference operator today.

At this time, I would like to welcome everyone to the Onyx Pharmaceuticals Year End Financial Results.

All lines have been placed on mute to prevent any background noise.

After the speakers’ remarks, there will be a question and answer session. [OPERATOR INSTRUCTIONS] I would now like to turn the call over to Onyx Pharmaceutical.

Thank you Rocky.

Good afternoon.

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

We thank you for joining us today to discuss our fourth quarter and year end 2005 financial results, which were released earlier today.

Please note that this call being held on February 16, 2006, 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 summarizes 2005 corporate achievements, Ed Kenney, our Executive Vice President and Chief Business Officer will discuss recent commercialization activities.

Subsequently, Hank Fuchs, our Executive Vice President and Chief Medical Officer will give a general, clinical overview.

Next Marilyn Wortzman, our Vice President of Finance and Administration, will discuss Onyx’s financial results.

Finally, Hollings will make closing comments and talk about our 2006 goals before opening up the call for questions and answers with the management team.

Given that the management team members are participating in this call from different locations, we may experience some temporary telephonic delays.

While we don’t think this will happen, if it does please be patient and stay on the line while we solve any logistical difficulties.

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 discussion of these risks and uncertainties, we refer you to our annual report on Form 10-K for the year ended December 31st, 2005, specifically the section entitled “Additional Business Risks” which we expect to file with the Securities and Exchange Commission by March 16th, 2006.

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.

Thank you Julie. 2005 was the most important year in the history of Onyx, culminating in the initial approval of Nexavar by the U.S.

Food and Drug Administration.

Nexavar was the first therapy approved for the treatment of patients with advanced kidney cancer in over a decade and the first targeted oral antiangiogenic and anti-proliferate agent.

This achievement represented more than 12 years of hard work by many dedicated individuals at Onyx and at our collaborator Bayer Pharmaceuticals Corporation.

This approval also marks Onyx’s entry into the U.S. oncology market.

While the approval of Nexavar was by far the most important event of the year, it could not have happened without a number of key events that preceded it.

Let me take a moment to remind you of some of the highlights.

Bayer and Onyx successfully advanced Nexavar from first in man to U.S.

FDA approval in approximately five years.

In addition, the largest randomized Phase III clinical trial ever conducted in advanced kidney cancer resulted in approval just two years from the treatment of the first patient in that Phase III trial.

With Pilot 1 designation and priority review, the FDA’s action occurred before year end and before our [PADUFA] date.

With the doubling of progression-free survival, the FDA granted full approval for all advanced kidney cancer patients.

In addition, at a planned interim analysis, we demonstrated a favorable survival trend and as stated in the label, patient treated with Nexavar lived longer.

Bayer and Onyx were the first to launch a new drug in kidney cancer and we did so with compelling results from a large, randomized study.

The drug was shipped within four hours of approval and our newly recruited, experienced field staff was detailing Nexavar the next morning.

Together we enrolled one of the largest expanded access programs in cancer history, treating over 2,000 advanced kidney cancer patients with Nexavar at more than 300 sites across the United States.

We established a first-in-class patient assistance program called REACH to create a single point of contact for patient services and reimbursement support, allowing patients to have Nexavar shipped directly to their houses.

We initiated commercialization efforts in the European Union with the regulatory filing in that territory as well as others internationally.

Together with Bayer, we launched enrollment in two additional pivotal Phase III trials, studying Nexavar as a single agent in advanced liver cancer and as combination therapy in patients with metastatic melanoma.

In the fourth quarter of 2005, we also announced our next strategic development initiative with plans to begin a pivotal trial in lung cancer using the same chemotherapy regiment as in our melanoma program.

We announced today that we have treated our first patient in this Phase III trial.

At Onyx, we increased our financial resources by raising net proceeds of approximately $137 million in a public equity offering.

We’re very proud of what we accomplished by the end of 2005.

Nexavar was approved by the U.S.

FDA as we established its effectiveness in a disease that has historically been very difficult to treat.

Nexavar was the first new therapy in kidney cancer in over a decade and is the only agent with compelling clinical benefit from a large, randomized study.

We have the added advantage of very successful, expanded access program that enabled physicians and patients to have direct experience with Nexavar prior to its approval.

As collaborators, Bayer and Onyx share a common strategic vision for Nexavar, maximizing its value for both patients and shareholders.

Since we believe that Nexavar may have broad utility for a number of different cancers, we are actively investigating Nexavar’s therapeutic potential and we expect this R&D investment to continue for several years.

In addition, we are capitalizing on the commercial opportunity in the rest of the world as we co-invest with Bayer in preparation for product launches in Europe and other territories internationally.

Though we are still very early in the launch process, we are pleased with our progress and in the interest in Nexavar.

In the fourth quarter, there were nominal Nexavar sales as the product was approved at the very end of the year.

This 2005 revenue was netted against expense.

As you will recall, Nexavar was approved during the holidays with only a few shipping days left in December.

In addition, we are utilizing only a select number of distribution sites, which minimizes the need for large stocking inventories.

In the first quarter call, we will detail for the first time Nexavar sales results.

Since this is the first year of launch in an evolving market, we will not be providing revenue guidance for 2006.

Now that Nexavar has been commercialized, the presentation of Onyx’s P&L will also change.

However, this new format will not alter the bottom line.

Marilyn will review the contemplated presentation changes and she and Julie will be available by phone to discuss them.

One added note, Bayer and Onyx have also become aware that some of you may have information on Nexavar sales through third-party databases.

However, our wholesaler contracts specify that Nexavar data is proprietary and cannot be released to any third party.

We have chosen to keep this information confidential for now given its competitive value.

As a result, these sources will not be reporting Nexavar sales.

Now I will turn the call over to Ed.

Thanks Hollings.

As you know in preparation for the U.S. approval of Nexavar, Bayer and Onyx established a team of sales and marketing specialists to facilitate adoption of the drug.

Anticipating competition, we moved quickly to capitalize on the important first mover advantage we were afforded by the December approval.

In fact, we shipped product into the U.S. market on December 20th, literally within hours of that approval.

In addition, our team of medical science liaisons has been interacting with the key opinion leaders in the renal cancer community to broaden the clinical program as well as assisting with medical education.

We’ve been pleased by the response from the healthcare professionals.

Their interest in Nexavar reinforces our belief in the significant unmet medical need that existed for patients with advanced kidney cancer.

We’ve also been working to leverage the exposure we gained through the expanded access program.

As Hollings mentioned, this program enrolled over 2,000 patients in total at over 300 sites, provided critical, first-hand experience with Nexavar to physicians and patients across the country.

One of our top priorities has been to transition the expanded access program patients to commercial supply.

This is an activity that was expected to take one to two months and we expect to finish as planned in the first quarter of this year.

Remember given where these patients are in their course of therapy, not all of them will make the transition and for those that do, duration of therapy will be impacted by their previous time on drug.

To support those who benefited from the expanded access program as well as new patients, Bayer and Onyx established a comprehensive reimbursement services program to maximize access to Nexavar.

This includes REACH, which Hollings mentioned, an acronym for Resources for Expert Assistance and Care Hotline, which provides a single point of contact for most patients.

We’ve been very pleased by the early interest in Nexavar as indicated by the call volume into the REACH hotline.

In addition, REACH also helps link patients to specialty pharmacies for direct product distribution.

We currently have multiple specialty pharmacies under contract that are shipping drug directly to the patient’s home.

In addition to the patients, in addition to the patient benefits of utilizing a specialty distribution system, it affords a tremendous benefit to bear on Onyx, ultimately enabling us to get detailed information on the business and market dynamics as well as effectively manage inventory.

This is important information that we will incorporate into our ongoing sales and marketing programs.

Working alongside the combined sales forces, the managed market team at Bayer has been very productive.

Though it’s still early, we are encouraged by the response from payers.

Nexavar is now covered by the majority of managed healthcare plans including all of the top 35 plans.

These 35 plans represent about 80% of the commercial covered lines and 75% of the Medicare Part D lines.

However, as you know, the reimbursement landscape has changed substantially and many individuals in the United States are still sorting out Medicare Part D.

With two new drugs entering the renal market almost simultaneously, the market where nothing has been approved in over a decade, we anticipate conventional treatment practices to change markedly.

Nexavar is the only targeted agent with statistically significant and clinically meaningful data from a large randomized trial.

I’d now like to turn the call over to Hank Fuchs.

Thank you Ed.

I’d like to begin by reminding everyone that Nexavar was approved for treatment of patients with advanced kidney cancer based on evidence from a large randomized Phase III trial.

In the Phase III study, Nexavar doubled progression-free survival to a median value of 24 weeks as independently assessed with a p-value of less than 0.00001, a hazard ratio of 0.44 and a 95% confidence interval ranging from 0.35 to 0.55.

Nexavar is the only drug shown to prolong progression-free survival in this patient population in a controlled clinical trial setting.

Because of the magnitude of the benefit observed, the FDA granted full marketing approval for Nexavar.

In addition, the FDA encouraged the companies to provide Nexavar to the placebo patients in the trial as well as to provide expanded access to all kidney cancer patients prior to Nexavar’s approval.

In an interim analysis based on 220 patients who died, it was reported that patients in the Phase III trial who were treated with Nexavar had a 28% lower risk of dying as compared to those patients receiving placebo with a hazard ratio of 0.72.

While this result did not achieve the pre-specified statistical hurdle of less than 0.0005 for statistical significance, these results demonstrate a favorable survival trend for patients who receive Nexavar in comparison to placebo.

The interim analysis was conducted before any real impact of patients crossing over from placebo to Nexavar was observed.

As the data mature, survival data from additional analyses will be released at appropriate scientific meetings.

However, given the evidence of Nexavar’s efficacy, it is expected that the placebo patients who switched over to Nexavar will benefit from drug treatment and thus this will impact additional survival analyses.

For detailed information about Nexavar, including important safety information, please refer to the package insert which can be accessed at www.nexavar.com.

Regulatory applications for the treatment of patients with advanced kidney cancer have been filed in Europe and we expect regulatory action sometime in the second half of the year.

Additionally, there is a similar expanded access program underway in more than 10 European countries.

Regulatory applications have also been filed in Australia, Brazil, Canada, Mexico and other territories internationally.

As was mentioned earlier in the call, Bayer and Onyx have pivotal trials underway in advanced liver cancer and metastatic melanoma.

In liver cancer, we’re conducting an international placebo-controlled Phase III trial evaluating Nexavar as a single agent.

We plan to enroll approximately 550 first-line patients in the study.

The co-primary endpoints are overall survival or time to symptomatic progression.

We expect to complete enrollment in this study this year.

In melanoma, there are two ongoing Phase III studies comparing the administration of Nexavar in combination with carboplatin and paclitaxel to treatment with carboplatin and paclitaxel alone.

In one study, sponsored by the company, approximately 250 patients are being enrolled to assess a primary endpoint of progression-free survival.

The other study sponsored by the Eastern Cooperative Oncology Group or ECOG will enroll about 800 patients and measure differences in overall survival.

We expect to complete enrollment of the company-sponsored study this year.

If the results are positive, the trial could serve as the basis for a new drug application with potential revenues for this indication in 2007.

And today, along with our partner Bayer, we announced the initiation of a Phase III trial in patients with non-small cell lung cancer.

In this study, approximately 900 first-line patients will receive Nexavar in combination with standard chemotherapeutic agents.

The study is being conducted, the study which is being conducted internationally will enroll patients with all histology’s including those patients with squamous cell lung cancer.

To date, we have collected data in lung cancer patients in a few different studies.

One was a 54 patient, single agent, Nexavar trial in second or third line non-small cell lung cancer.

The median progression-free survival in this refractory population was over three months.

In comparison, in a recent large randomized study with another agent compared to placebo, the reported median progression-free survival was 2.2 months for the treated group and 1.8 months for the placebo.

A second data set comes from a subset of 14 evaluable non-small cell lung cancer patients treated in the first line in a single arm, Phase I study evaluating the administration of the combination of carboplatin, paclitaxel and Nexavar.

For the lung cancer patients on the combination therapy trial, the investigator reported an overall median progression-free survival of approximately 245 days or eight months.

In a recent randomized study with another agent in the first line setting using the same chemotherapy combination, the median progression-free survival was 6.4 months for the treated patients.

The combination therapy data in lung cancer patients built on our observations of tolerability and activity in a growing number of melanoma patients treated with the same drugs.

The decision to take the combination therapy forward in a Phase III study is further supported by the demonstrated efficacy of an antiangiogenic compound in this disease as well as recognizing carboplatin and paclitaxel as a standard care for lung cancer patients.

Because we believe that Nexavar has broad potential as an anti-cancer agent, we are moving quickly with Bayer to test Nexavar’s effectiveness in a number of tumor types.

We initially identified kidney cancer as a disease where we could gain quick market entry as it was a disease that was poorly served.

However, we believe that the proof of concept documented in kidney cancer can now be expanded to other cancers and thus increase Nexavar’s value.

In addition to pivotal studies in liver cancer, metastatic melanoma in lung cancer we planted again a number of additional studies.

I’d like now to turn the call over to Marilyn.

Thanks Hank.

Onyx reported a net loss of $38.4 million or $1.00 per share for the three months ended December 31st, 2005, and a net loss of $95.2 million or $2.64 per share for the twelve months ended December 31st, 2005.

We had stated previously that we anticipated a net loss of approximately $100 million in 2005.

Therefore, our net loss was at the lower end of the guidance.

Onyx reported no revenue for the fourth quarter and $1 million for the twelve-month period ended December 31st, 2005.

As Hollings stated earlier, in the fourth quarter there were nominal Nexavar sales and these were netted against expenses.

The 2005 revenue represented a payment received from Shanghai Sunway for exclusive rights to the p53-selective virus, ONYX-015.

Onyx recorded $500,000 in revenue for the comparable three and twelve-month periods in 2004.

This revenue represented a milestone payment from Pfizer when a clinical trial was initiated for PD 332991, a cell cycle inhibitor that resulted from our collaboration with Warner-Lambert.

As Hollings mentioned, given Nexavar’s recent launch as well as evolving competitive landscape, we are not giving 2006 revenue guidance.

R&D expenses for the fourth quarter and twelve months ended December 31st, 2005, were $22.7 million and $53.1 million respectively.

This compares to $10.2 million and $35.8 million in the same periods of 2004.

The increase in R&D expenses in 2005 reflects higher clinical development costs associated with Nexavar.

And in the fourth quarter in particular, we incurred a significant amount of clinical trial expenses including those associated with the Phase III liver and melanoma trials as well as the expanded access program.

While we anticipate first quarter R&D expenses may be lower than in the fourth quarter of 2005, we expect total R&D costs for Nexavar in 2006 will remain at about the full year 2005 level or be slightly higher as we support ongoing trials including today’s announcement of the fourth pivotal trial in lung cancer and as we initiate additional clinical studies in other tumor types.

However, how these expenses will be reflected on the Onyx P&L will change in the first quarter and I will talk about that in a moment.

Selling, general, and administrative expenses were $17.8 million in the fourth quarter and $39.7 million for all of 2005.

This compares to $5.5 million and $14.3 million of SG&A expenses in the same periods in 2004.

Fourth quarter expenses included the cost of our U.S. sales force and Onyx’s share of the U.S. launch costs and marketing and sales costs for territories outside the U.S.

We expect total program expenses in this category to increase significantly, year over year as we and Bayer incur a full year of U.S. sales and marketing costs, including Phase IV studies and investigator-initiated studies as well as invest in pre-launch preparations for Europe and other territories worldwide.

We expect the quarterly expense level in 2006 for this category to be similar or a bit higher than that seen in the fourth quarter of 2005.

How we reflect expenses in this category for 2006 will also change with the new P&L, which I will describe in just a moment.

At December 31st, 2005, we had cash, cash equivalents, and marketable securities of $284.7 million as compared to $209.6 million at December 31st, 2004.

We added approximately $136.5 million to our cash positions in November 2005 as a result of issuing 5.8 million shares of common stock in a public equity offering.

At February 10th, 2006, we had 41.3 million shares outstanding.

The approval of Nexavar triggered a final creditable milestone payment from Bayer to Onyx in the amount of $10 million that we received in January 2006.

These milestones totaling $40 million in all will be repaid to Bayer once the two companies begin generating profit from the collaboration.

And the repayments do not flow through the P&L.

Previously we had provided net loss guidance on an annual basis.

However, we will not be giving any revenue or bottom line guidance for 2006.

With a newly introduced drug and an evolving competitive landscape, it would be impossible to accurately forecast sales at this time.

We want to reiterate that Bayer and Onyx believe that Nexavar in addition to having proven its utility in kidney cancer may also be used in a number of other different tumor types.

With that in mind, we are committed to making the investments required to tap Nexavar’s full commercial value.

Before concluding my remarks, I would like to talk for a moment about the presentation of our income statement beginning in the first quarter of 2006, which will reflect Nexavar’s new commercial status.

Though the format of the income statement will be changing, Onyx’s net profit or loss will not be impacted by this change.

While the anticipated presentations that I am about to explain is based on similar commercial arrangements in our industry, the proposed P&L is now under review by management and our outside auditors and therefore is subject to change.

As you know, through 2005 our P&L reflected 50% of all Nexavar program expenses in our R&D and SG&A lines as our collaboration agreement with Bayer calls for a 50/50 cost sharing worldwide except in Japan.

Beginning in the first quarter of 2006, all Nexavar revenues and shared expenditures, which will exclude costs associated with our respective U.S. sales forces will be accounted for as an unconsolidated joint business.

Onyx will recognize its share of profits if any in the unconsolidated joint business as operating revenue.

Any loss from the unconsolidated joint business, which is expected to be the case in 2006, will be reported as an operating expense item and labeled “loss from unconsolidated joint business”.

As Hollings mentioned in his remarks, it is our intention to invest appropriately in Nexavar in order to maximize its potential.

The calculation of profit or loss generated by the unconsolidated joint business will be made as follows.

Onyx’s share of the collaboration profit or loss is 50% in the U.S. where we have co-promotion rights.

Elsewhere in the world, except Japan, the profit split is also 50/50 calculated after a small percentage of sales is paid to Bayer because of their investment in the ex-U.S. sales and marketing infrastructure.

The collaboration profit or loss will include total net product revenue less all shared costs and expenses.

These will include U.S. marketing, worldwide sales and marketing, R&D and G&A.

Onyx’s share of the unconsolidated joint business profit or loss will also include consideration of our direct expenses that were included in the calculation of collaboration profit or loss.

And that will be reflected in the operating expense section of our P&L and categorized as either R&D or selling, general, and administrative expenses.

Historically, our expenses have been about 10 to 15% of total program costs.

So our P&L will be changing to reflect Nexavar’s commercial status, Onyx’s net profit or loss will not be impacted by this.

In addition to changing the accounting presentation for the joint business, in 2006 Onyx will also begin expensing share-based payments to employees as required by FAS 123(R).

If there are questions about this new P&L reporting format, both Julie and I will be available after the call to walk through the anticipated presentation.

Now I’ll turn the call back over to Hollings.

Well while 2005 was a momentous year, we expect 2006 to be even more significant as we establish Nexavar as a leading treatment for advanced kidney cancer.

And we see kidney cancer as only our first step as we believe that Nexavar may be useful in a wide array of cancers.

Together with Bayer, we are committed to making the investment in this drug that will allow us to realize its full therapeutic and commercial potential for the benefit of patients and investors alike.

For that end, we have a step, established a number of corporate goals for 2006.

These include achieving a leading U.S. market share in kidney cancer; launching Nexavar in Europe and other territories internationally; completing enrollment in the pivotal company-sponsored melanoma trial as well as the Phase III liver trial.

Having initiated already today the pivotal lung cancer trial, we’ve already achieved that objective.

And we will continue data updates at appropriate scientific and clinical meetings.

We also intend to start an adjuvant kidney cancer trial this year and open other randomized Phase II trial.

Nexavar is a unique molecule.

It’s a convenient oral medication.

It is generally well-tolerated.

It has already shown single agent efficacy in a difficult tumor type and it has shown in early clinical studies that it, that it is potentially combinable with other anti-cancer agents.

We do believe Nexavar may change the way cancer is treated.

Thank you for your time.

We would be now happy to take questions.

[OPERATOR INSTRUCTIONS] Your first question comes from the Steve Harr from Morgan Stanley.

Hi Steve.

Steve?

Operator, I think we have a problem.

Rocky?

Hello?

Your next question comes from David Witzke from Banc of America Securities.

Hi David.

I know you can’t speak much to the launch, but I wondered regarding the expanded access program, any update on average duration of therapy being observed out in the field?

And how this compares to progression-free survival in the Phase III study?

Yes well obviously that’s a very interesting question.

At this stage, we don’t have any additional data to update the duration.

We will be generating data out of that as well as out of the Phase III study as we look at that on the final data analysis.

But at this stage, unfortunately David we can’t provide any additional guidance.

Okay and then regarding profitability in the joint venture, is there a sales threshold that you need to cross in the U.S. for that going to the--

Yes getting to profitability depends on a lot of things, not only the sales threshold but what the stage that you’re at in terms of the, stage of the launch in various territories as well as what the level of investment in R&D is.

So I think it’s premature for us to provide guidance there.

I think our, I just want to state that our goal is not to drive to short-term profitability, which would be one option, but rather to maximize the value of this asset.

Okay and then the first line, non-small cell lung cancer trial, is there an interim look built in?

And also just commentary around the decision to go and disclaim the histology where Avastin was not pursed?

And also are you looking, are you restricting on brain metastases as well?

Hank you want to cover that one?

Yes sure.

Let me say first of, yes there are in certain, there is a data monitoring committee.

They will oversee the safe and ethical conduct of the clinical trial.

There are interim analyses planned in the clinical trial, but we have not elaborated on a schedule of events or a set of expectations around those interim analyses.

In respect to our decision to include patients with all histology’s, I do want to just take the opportunity to quickly review that in prior clinical trial of Avastin in lung cancer, 13 patients who had squamous cell histology were enrolled in the Phase II clinical trial and of those four had major serious bleeds.

We have treated almost 150 patients in our prior clinical trials of Nexavar.

Not all of whom were squamous cell.

And we have been reasonably pleased so far with the safety of Nexavar in the setting.

We were very careful to review that information with the key opinion leaders and academic physicians who know the data on our agent as well as other agents forward and backward.

And also keying to engage health authorities to assure the safe and ethical conduct of the clinical trial.

And out of all of that discussion, we concluded that it was safe to proceed with an eligibility criteria that includes all histology’s.

And as far as the brain metastases, I’m going to defer that question for the time being.

Back to you Hollings.

Right.

Okay, thank you.

Next question?

Your next question comes from Steve Harr from Morgan Stanley.

Are you there Steve?

I was there.

Can you hear me?

Can hear you now.

Okay, really quickly.

And I’m not sure if David kind of asked this question.

Can you give us just a little bit more granularity on how many patients are on drug or if you’ve seen any change in the prescription patterns since the beginning of February with the launch of Sutent?

Well number one is, yes we will provide updates on how things are going.

It’s, we don’t intend to provide them except at the quarterly call, so I think we’ll have to wait on your first part until then.

I think in general obviously we now have an additional product out there in the marketplace.

I think again it’s very soon to provide any color about how that’s impacting thing.

I think the, very clear thing though is it does not impact our message to physicians, which is we are the only agent that’s available that has data from a large randomized study that not only doubled progression-free survival but also had a favorable survival trend.

So I think that’s the main marketing message for us.

Are you going to, are you going to leave us, cause basically you’re leaving us in the dark on any progression since you’re blocking the channels until May around this, around this launch.

Is there any way to consider some type of an interim update for people, investors?

Well we understand the desire for folks to get the information as real time as possible.

I think again from our standpoint given the dynamic in the marketplace, we just decided not to provide the INS or other type of tracking of that.

There are other surveys that will be available out there.

Again the accuracy of those we’ll have to take a look at ourselves.

But I think that I mean from our standpoint, the right business decision is to do what we’re doing and to provide you the data as the quarterly call occurs.

And maybe just a quick update on, you’re now in Phase III studies for three separate indications.

Are there, do you have any plans to or any other areas over the next 6 to 18 months?

Absolutely.

Hank referred to the fact that our intention is not simply to stop with the lung cancer study as the only additional tumor type in general.

The work that Hank and others at Bayer and our team have been looking at is prioritizing indications in other common malignancies where we see the opportunity to look at this in randomized studies.

So, you should expect and one of the objectives that we have before the end of the year is to start a randomized study in another tumor type by the end of the year.

Can you give us guidance as to what trials you’re looking at or--?

No there’s a range of different types of cancers that are potentially of interest.

But we haven’t gone public with that yet.

All right.

Thank you.

Your next question comes from Howard Liang from Leerink Swann.

Hi Howard.

Hi, thanks, about converting patients on the extended access program, my understanding is that each patient on the AP has a 30 day supply.

Can you explain why it may take through the end of quarter to convert all of the patients?

Yes, well number one the thought, as you know the key thing from our standpoint is to make sure that patients have a continuous supply of drug.

So that’s paramount to what we’re doing.

We did notify patients prior even to marketing approval that had been in the AP that the REACH line was available and that to get their coverage decisions, they should call.

However, not all of them did that.

And when patients went back into their, went back into their physicians, we did not want them to be without drug.

We wanted them to have continuous supply.

So even if they had drug on hand, had they, if they didn’t have coverage, then they were able to get continuous supply.

And I guess just the other thing to mention, it’s, you’re talking about the patients on RXs and some of those patients fall into the general category of patients that are now under the newly implemented Part D and just not all of the patients have signed up for that.

So at this stage, again whether it’s an RX patient or in other patients, it’s key that they have access to the drug while the coverage decisions are being worked out.

Okay and you indicated that more survival analyses are planned for the Phase III RCC trial.

I thought there’s only one final analysis after final 40 events, only that one left.

I think you have a p-value of 0.04.

That’s for that.

Can you provide more color on what these additional analyses are and when you expect the final analysis, what I call the final analysis will occur?

You’re correct about the final analysis.

There is one additional interim analysis and that’s part of our Phase IV commitments to the FDA that we will provide to them and at the appropriate scientific meeting we can provide an update.

Okay and if can ask one more, going back to the non-small cell lung cancer trial Phase III about the interim analysis, will that, can that serve as the basis for following per FDA like in the case of, in the cases of RCC and HCC studies?

Well Hank referred to that but Hank you want to clarify the interim analysis for--

Well could they serve as the basis?

It depends on the data.

And it’s clearly too early to speculate on what those data might be.

If they are positive, can you file?

That’s--

I think--

Too early to speculate.

I think that the, this is a survival study.

And I think that if there was an interim analysis that was sufficiently positive that could be a possibility.

But it’s not, this is not analogous to the, to the built-in PFS analysis that existed under the renal cell study.

Okay great.

That’s helpful.

Thank you very much.

Your next question comes from Jeff [Netchum] from JP Morgan.

Hi Jeff.

Hi actually this is [Christian Metropolis].

Hey Chris.

Hey.

A quick question on the Phase I triplet non-small cell lung cancer data.

Just wondering if there’s any safety data from that trial from the long follow-up on the patients?

And if you’d share any of that with us?

Or if maybe that would be published?

Well this is a, Hank you want to, I think he’s talking about the 14 patients?

Yes and there was no remarkable findings in that regard.

It’s probably worth mentioning that investigators have also reported on the safety of the combination of carboplatin and paclitaxel in patients who are, who have metastatic melanoma.

In fact, two separate investigators have reported over 70 patients worth of data.

And in addition, as you know, we are conducting a large randomized Phase III clinical trial as a combination of carboplatin, paclitaxel and Nexavar in comparison to carboplatin and paclitaxel alone.

So we’re actually accumulating quite a bit of safety data.

And at the present time, feel confident in the combinability of Nexavar with carboplatin and paclitaxel.

The importance of this in general should be very clear in that carboplatin, the platin drugs and the taxane drugs are probably the, two of the most commonly prescribed drugs for the treatment of cancer.

So the utility of Nexavar, its broad applicability is something that’s got clinicians and us very excited.

And will be seeing any of that Phase I data from the triplet and the 14 lung cancer patients?

I think that’s been presented once already at a lung meeting but I’m sure it will be presented again as more data are available and mature.

All right.

Thanks.

Next question.

Your next question comes from Han Li from SunTrust.

Hi Han.

Hi, can you quickly go over the data you mentioned earlier on the lung small cell lung cancer?

I think I missed some of the numbers.

Yes Hank, can you repeat that data?

Yes, so there were two studies that I had talked about.

One was a 54-patient study of Nexavar given as monotherapy for relapsed and refractory patients in the second and third line.

And the important finding of that study was that the observed, progression-free survival in those patients was approximately three months.

And that compares favorably to the expected progression-free survival of patients in that stage of disease.

And I compared that to a recently completed trial of a now approved drug in that setting in which the approved drug demonstrated 2.2 months of progression-free survival in comparison to 1.8 months of progression-free survival in the control arm of the setting.

So, and basically we’re looking at three, we observed three months compared to an expectation of 1.8 months in the relapsed, refractory patients, n of 54.

The second piece of information I refer to is a sample size of 14 patients who were treated with a combination of carboplatin and paclitaxel and Nexavar.

Generally these were earlier stage disease patients.

Then what I had just previously described and there the investigator assessed progression-free survival was 245 days or 8 months.

And the comparison I wanted to draw attention to was that there was a recently completed again randomized control clinical trial comparing carboplatin and paclitaxel, the same base chemotherapy agents with and without another antiangiogenic drug.

And in that study the success progression-free survival in the treated arm was 6.2 months and was just over 4 months in the control arm.

So again, it makes our 8 months Nexavar, carboplatin and paclitaxel look interesting in comparison to historical controls.

And of course it goes without saying but I want to say it again anyway that none of the results that we’ve obtained to date are from randomized and controlled clinical trials.

And what makes today an important day for us and for lung cancer patients is that we’ve initiated a definitive clinical trial comparing the activity of Nexavar when added to carboplatin and paclitaxel to patients who are receiving paclitaxel and carboplatin alone with as Hollings mentioned, overall survival as a primary endpoint.

If that study is successful as we hope it will be, it will support registration of the combination of Nexavar with carboplatin and paclitaxel for patients who have not yet been treated with systemic chemotherapy for their lung cancer.

And let me just reiterate something else that Hank had mentioned which is we had, have added confidence in moving forward with this combination because of the data that we generated in the melanoma setting and the same combination where and again there was, I think 77 patients that had been reported out where the median progression-free survival in that disease was more than half the patients had a median PFS of over 6 months which would compare to about 2 months.

So again it’s an active combination in another disease as well as the data that Hank just mentioned.

And then finally clearly Avastin had shown activity in a similar combination as well.

Okay, are we going to see some of the lung cancer data at ASCO?

And we don’t comment on specific meetings until abstracts have become publicly available there.

So at the appropriate time, we certainly will provide the information about what has been accepted at ASCO.

Okay.

Guys thanks.

Next question.

Your next question comes from Gene Mack from HSBC.

Hi Gene?

Hi.

How are you?

Thanks for taking the question.

I was wondering if you could at least talk around what sort of feedback you’re getting from the clinical community as far as the triggers for making a decision to use either Nexavar or Sutent during, sort of characteristics on the label, are clinicians pointing to as things that have the most traction with them in terms of decision-making to put patients on?

Well all I can say is our message of doubling the PFS and survival is the compelling message that’s out there.

And then just to go over, I got confused when you were talking about the expenses on the, on the P&L, historical expenses were just around 10 to 15%.

Now is that, were those your isolated expenses or sort of what were built into the joint venture?

Of the expenses attributable to Nexavar, ours have been in the range of 10 to 15% of the total expenses historically.

Okay and those are expenses that would land on your P&L as--?

Well actually in 2005, 50% of all expenses had landed on our P&L.

I think what you’re getting at is in ’06 to try to break out and if you want to try to estimate which ones are our expenses, that’s sort of a guidance to provide something to, if you wanted to try to separate it out from the information that we’ve provided you to date.

And again I think that the important things is that with the, the current approach I think it’s important for folks to take their models and actually give Julie and Marilyn a call to actually go over what your numbers and you’ve, how you’re estimating it to see if they can’t help provide or illuminate I should say the words around just the accounting presentation.

It’s not easy just listening to the words.

I understand that.

So--

Yes.

Gene, this is Julie, cause there’s no change in the bottom line as Hollings and Marilyn just said, it’s a difference in presentation now that Nexavar is commercialized.

And so I’d be glad to talk to you after the call.

Yes, I’ll keep you busy.

Thanks.

Next question.

Your final question comes from David Bouchey from RBC Capital Markets.

Hey David.

Well I’m honored to be the closing question here.

It better be a good one.

All right well let me lob you one here.

Now that you’ve had a chance to look at least the first few weeks for Nexavar in the market and with Sutent a little bit of experience, can you comment on the relative pricing between the two that you’re seeing?

Well actually there was some confusion early on around that.

I think it’s important to note that Sutent was priced right on top of the pricing of Nexavar.

So there is no difference in therapy.

As you know, they have schedule that is four weeks on, two weeks off.

And if you look at the cost for that six weeks of therapy compared to the cost of Nexavar for six weeks of therapy, it’s essentially identical.

Okay, so on an annual basis, the costs would be identical?

Assuming the same length of therapy, yes, duration of therapy yes.

And lastly you mentioned some Phase IV studies that you’re doing.

Could you clarify what those are?

Well what I had mentioned on there is that there are, there’s Phase IV commitment.

And included in that Phase IV commitment would be to provide to the agency the data on the, not only the final study report on the Phase III study but also in interim, in additional interim survival analysis.

When you, when you think about Phase IV studies, we haven’t actually gone public with a range of studies.

I think one of the exciting things about this compound is that the community has shown a great deal of interest in the drug.

And even prior to marketing, marketing approval, the National Cancer Institute has made this one of their top priorities.

So there’s been a large number of studies, data which will be presented at upcoming scientific meetings.

Now that we’re in the market, we will have investigator-initiated trials, sometimes referred to as Phase IV studies also.

And we have some of our priorities in the medical theories groups are working through that, but we really haven’t given any specificity around that at this stage.

Okay.

Thanks Hollings.

Okay.

Well if there are no other questions, we appreciate.

Hold it just a second.

Was there another question operator?

You do have a question from Howard Liang from Leerink Swann.

Okay Howard.

Thanks for taking the follow-up.

A question about the liver cancer trial, the HCC trial.

Are patients stratified by their cirrhosis status?

Hank, do you?

I know it’s Child-Pugh A but is that the answer Hank?

I’m sorry Hollings, say again.

Well the question is Howard asked are patients stratified in the HCC?

And I’m not sure if it goes beyond my response which is the entry criteria is just for Child-Pugh A.

Right.

So I think that’s the, that is the answer right?

Yes.

Okay.

Are there further stratification beyond just the or the inclusion criteria of Child-Pugh A?

Geographic territory.

Okay.

Drug or placebo.

And I guess you haven’t, you guys haven’t talked about the interim analysis that--

We should recognize that there is an interim analysis in that study around time to tumor progression.

And I think that was commented on recently by Bayer.

That analysis will occur.

We have suggested that we would not build an expectation around necessarily an early approval.

Number one RCC and the dramatic results are rare in trials.

But number two is in liver cancer in particular just the imaging and accurately being able to monitor and show meaningful differences in progress is more difficult because of the setting of the disease.

So because of that complication, we’d prefer to build the expectation around the final analysis around either overall survival or time to symptom progression.

And if that analysis were successful, one could see revenues in the ’08 kind of a timeframe.

Great.

Thanks very much.

Okay.

There’s one more.

Your next question comes from Mike King from Rodman & Renshaw.

Hey Mike.

Thanks for squeezing me in guys.

Appreciate it.

Yes go ahead.

Just wanted to know, you may have touched upon this.

I got on the call a little bit late, but have you given us a sense of where you are with respect to Medicare Part D and what your thoughts are on how big a role that will play in the launch?

Yes so on the, on the call Ed had mentioned that the top 35 plans now have us all on the formulary.

And because we were commercial before the end of 2005, that put us on the formulary for the Part D setting.

So again, that those plans represent between ¾ and 80% of the covered lives.

So it looks good there.

I think the big, the issue around Medicare Part D is it’s a new program just starting up.

Not all patients have signed up for Medicare Part D. So the REACH program, which handles the determination of benefits is working that through for the patients.

And in some cases, requiring them to actually get signed up for a Part D plan to be able to get the benefits of Medicare.

So that’s something that’s a part of just not only the initial part of a launch to get coverage, but in this particular setting to actually deal with a new benefit for patients out there.

Can you remind us what the average age was of your patients?

I think it was 58 or 59 like and some--

58 or 59.

Great.

Thank you.

Yes.

Okay, now if there are no more questions, I want to thank everybody for joining us this afternoon and we look forward to giving you some more specifics about the launch and the results in terms of sales, top line results as well as the financial, rest of the financials at the first quarter call.

So again, thank you all very much.

And look forward to talking to you.

And by all means, I invite you to call Julie and Marilyn to talk about the P&L.

Take care.

Ladies and gentlemen, this concludes today’s Onyx Pharmaceuticals Year End Financial Results Conference Call.

You may now disconnect.