美國安進 (AMGN) 2006 Q4 法說會逐字稿

Good afternoon.

My name is Jason, and I will be your conference operator, today.

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

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

After the speakers' remarks, there will be a question-and-answer session.

If you would like to ask a question during this time, simply press *, then the number 1 on your telephone keypad.

If you would like to withdraw your question, please press *, then the number 2 on your telephone keypad.

Thank you.

Onyx Pharmaceuticals, you may begin your conference.

Thank you, Jason.

Good afternoon.

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

We thank you for joining us today for our 4th quarter and year-end financial results conference call.

Please note that this call, being held on February 15th 2007 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.

Your order of our prepared comments will be as follows.

After Hollings Renton -- our CEO -- makes some brief introductory remarks, Ed Kenney -- our Executive Vice President and Chief Commercial Officer -- will talk about ongoing commercialization activities.

Then Hank Fuchs -- our Executive Vice President and Chief Medical Officer -- will provide a clinical update.

Next, Greg Schafer -- our CFO -- will discuss our 4th quarter and full-year financial results.

Finally, Hollings will make closing comments, and then open up the call for q-and-a with the management team, including Laura Brege, our Executive Vice President and Chief Business Officer.

Please note that we will be making forward-looking statements during this teleconference that could include financial, clinical or 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 10K for the Year ended December 31st 2005.

Specially, the section entitled, "Business Risks," as well as to our more-recent filings with the SEC.

Additionally, our 2006 10K -- including updated risk factors -- is expected to be on file in mid-March.

Also note that the following 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.

Now I'd like to turn the call over to Hollings.

Thank you, Julianna.

While today, we will be focusing on our business and financial results from last year, highlighted by the robust 1st-year sales of meds that are currently on the market to treat advanced kidney cancer -- clearly, the momentum established in 2006 continues to build in 2007.

As many of you know, we announced earlier this week that our pivotal Phase 3 Trial in Advanced Liver Cancer was stopped early, because of superior overall survival in the treatment arm, with no imbalance in the "serious adverse events," rate.

This was great news for advanced liver cancer patients who have had few treatment options -- as well as for Onyx and our collaborator Bayer -- as we work to make Nexavar a standard of care around the world in multiple tumor types.

While this was certainly exciting news for the Company, 2006 was a year of major achievements for Onyx, as we and Bayer successful launched Nexavar in its first indication -- advanced kidney cancer -- realizing $165 million in worldwide net sales for the year, and $64 million in the 4th quarter.

Nexavar is now approved and available in approximately 50 countries worldwide, including the largest European markets.

During 2006, we also completed enrollment in pivotal trials of Nexavar for advanced liver cancer and metastatic melanoma, initiated a Phase 3 lung cancer trial, and completed a randomized Phase 2 trial in melanoma, in combination with chemotherapy.

In addition, clinicians are generating data with Nexavar in many other cancer types, and in combination with existing and new therapies, through dozens of investigator-sponsored studies.

We are proud of what our people have accomplished.

Yet these are just the first steps in building a powerful global oncology franchise around Nexavar.

To that end, beyond stepping up our commercial efforts to capitalize on the expanding kidney cancer market, we and Bayer are executing a comprehensive development program to fully realize Nexavar's clinical and commercial potential in multiple other tumor types.

We achieved rapid market entry by initially pursuing a tough-to-treat, underserved disease -- advanced kidney cancer -- where patients had severely limited therapeutic options.

With Nexavar, Onyx and Bayer had established a brand and an international franchise that can be leveraged to support additional indications as they become approved.

Our pursuit of liver cancer and melanoma built further on this strategy.

With liver cancer, we have the opportunity for a second indication.

Our key priority now is to work with regulatory authorities toward an early-as-possible submission, while we prepare launch plans in anticipation of a favorable review.

With melanoma, we have an encouraging signal in combination with a commonly-used chemotherapeutic.

This activity across tumor types, and in what generally has been regarded as very-tough-to-treat diseases, increases our confidence in our clinical development programs in the more prevalent tumors.

At the same time, we are conducting and launching new trials with Nexavar, in combination with standard therapies, to treat lung and breast cancer -- two of the most common cancers.

There's clear proof of clinical and commercial success with antiangiogenic and antiproliferative agents, and a well-characterized development and regulatory pathway in these diseases.

In the case of [Avaspin], its activity has been most apparent in combination with standard regimens in the most common malignancy.

Given Nexavar's early evidence of combinability, its tolerability and convenient oral administration, we believe Nexavar has the potential to be clinically valuable in these diseases, which represent major untapped opportunities for the product.

It is important to reiterate and re-emphasize to you that the opportunity with Nexavar is global.

And our collaboration with Bayer allows for a 50/50 profit split on a worldwide basis, except for in Japan.

Through Bayer's acquisition of Schering AG, they have further strengthened their position in the global oncology market, and are well-positioned to maximize sales in Nexavar's current and future potential indications.

While we continue to aggressively evaluate and identify potential candidates to supplement our pipeline, and leverage our oncology drug development and commercialization capabilities, finding the right asset takes time.

Though we believe pipeline expansion is important, our primary focus remains Nexavar -- for the following reasons.

We view Nexavar, really, as multiple products.

And we are seeking to successfully capitalize on its unique attributes.

Not only in kidney cancer, but in other types of cancers, as well.

We believe the market opportunity for Nexavar in the US and internationally for advanced liver cancer exceeds that of kidney cancer.

Nexavar has now shown activity and tolerability in 2 tumor types -- kidney and liver cancer -- with an additional preliminary signal in the 3rd tumor type, melanoma.

This activity in the historically tough-to-treat tumors, increases our belief that the drug also has the potential to be a valuable treatment for patients with lung, breast and other cancers, where antiangiogenic and antiproliferative agents have been shown to be effective.

Given Nexavar's oral availability, combinability and tolerability, we believe we can add considerable value in these large markets, if the drug is shown to be effective in any one of these settings.

We are more confident than ever that Nexavar will be able to benefit patients with a variety of cancers, around the world.

Clearly, the momentum established in 2006 continues to build in 2007.

Now, I'll turn the call over to Ed, to discuss our commercial success and ongoing activities with Nexavar.

Thanks, Hollings.

Unique attributes of Nexavar -- which provide a number of important clinical benefits -- have been well-received in the advanced kidney cancer market, and are growing global sales.

In just the first 12 months of commercial availability, roughly 4,500 physicians have treated over 10,000 patients with Nexavar in the US, alone.

We are driving sales in a competitive market, which has seen explosive growth due to the introduction of targeted therapies.

As we saw in the US, there has been rapid uptake in the rest of the world where Bayer is launching Nexavar.

We're pleased with the continued growth and market penetration, which has led to full-year Nexavar net sales of $165 million.

This is well ahead of our pre-launch estimates, and it makes Nexavar one of the most successful launches based on first-year sales of a new cancer drug.

We're convinced that the proven clinical utility and relative ease-of-use of Nexavar will permit us to continue to compete effectively.

We are well-positioned in Europe and the rest of the world where oral drugs are mainstays of therapy, and where Bayer-Schering pharma has a well-established presence and expertise.

Nexavar was approved in Europe in the 2nd half of 2006, and commercialization in that region's largest markets -- Germany, France, Italy, Spain and the UK -- is underway.

Nexavar has also received broad pricing approvals, generally at levels consistent with the US price.

Many data sources indicate that advanced kidney cancer patients are being treated with multiple agents.

Market data also suggest that a much higher percentage of patients are being treated in both the first- and second-line settings, as patients experienced continued benefits from therapy.

As new competitors enter this market, we expect to see continued market expansion, with increased combination and follow-on therapy.

And we believe that the now-proven oral agents such as Nexavar are well-positioned, and becoming increasingly entrenched.

Fundamentally, the landscape of advanced kidney cancer treatment has changed -- both in terms of better agents that clearly increase progression-free survival, and broader patient access, facilitated by widespread availability in the community setting.

As physicians become more expert with targeted agents like Nexavar, they're finding ways to derive even greater patient benefit from them.

This includes using the drugs sequentially, as well as evaluating their use in combination.

At the end of the year, we received a $5.2 million order from a biopharmaceutical company that is embarking on a clinical development effort that will examine the combination of its development compound with Nexavar.

We anticipate seeing more of this kind of activity and these kinds of purchases over the next few years.

And in light of Mondays' news, our joint marketing team is busy analyzing and preparing commercial plans -- assuming a favorable filing and positive review by various regulatory agencies of our liver cancer dossier.

Bayer and Onyx already have a worldwide infrastructure in place that will allow us to move quickly in response to any favorable regulatory actions, and that can be readily leveraged for any potential new indications.

In addition, we are also conducting market research around our Phase 2 melanoma results -- administering Nexavar in combination with DTIC -- to assess the path forward in this disease.

I'd now like to turn the call over to Hank Fuchs, to talk about the progress we're making in our programs to expand the future of the clinical utility of Nexavar.

Thanks, Ed.

This is an exciting time at Onyx and in the development of Nexavar.

We have a proven drug with tremendous potential, in opinions shared by the clinical community.

Nexavar's availability had provided a valuable new therapeutic option for advanced kidney cancer patients -- and also given the clinical community broad exposure to Nexavar.

And we are more encouraged than ever with the recent data-monitoring board's recommendation to stop our Phase 3 liver cancer trail early, due to improved overall survival in the treatment arm.

We are building upon the solid foundation to maximize the value of Nexavar for people with many other types of cancer, and we are increasing our attention to the more common malignancies -- combining Nexavar with approved drugs, and in settings which targeted therapies have already been validated.

We are focused on expanding the utility of Nexavar in advanced kidney cancer.

Two long-term Phase 3 studies -- one in the US and one in Europe -- are assessing the efficacy and tolerability of Nexavar, when administered to kidney cancer patients in the adjuvant setting.

As for liver cancer, let me quickly recap our compelling positive news from earlier this week.

In a planned interim analysis of overall survival from our Phase 3 study in advanced liver cancer, the independent data-monitoring committee recommended stopping the trial early.

This was based on superior overall survival efficacy in the Nexavar group, with no imbalances in serious adverse event rates in the 2 arms.

We and Bayer accepted their recommendation, and our teams are commencing discussions with health authorities around the world, in order to file for registration and approval as soon as possible.

In advanced melanoma, we have completed 2 randomized trials.

While we were disappointed that our clinical trial events are in combination with carboplatin and Paclitaxel , the previously treated patients did not need its primary endpoint of improving production pre-survival.

We were encouraged by the preliminary data from a randomized Phase 2 trial, combining Nexavar with dacarbozine, or DTIC.

This small, though independently-reviewed trial, enrolled first-line patients.

Top-line data from the trial showed that the combination of Nexavar with DTIC for [Stetic] alone extended progression-free survival to 21 weeks, from 12 weeks.

The hazard ratio was 0.67 -- which means there was a 50% overall improvement in progression-free survival in the treatment arm.

The stated set is continuing to mature, and we will look to the final results to guide our next steps in melanoma.

The liver data -- as well as the melanoma data -- suggest the potential benefit of Nexavar in additional cancers.

And in the case of melanoma, in combination with other anti-cancer agents.

The data also underscored the need for a diversified clinical program, consisting of multiple randomized trials.

Because it is impossible to predict in what tumors or with what agents in which stage of disease Nexavar will be successful, we are increasing the breadth of our program of randomized studies.

As Hollings mentioned, the major initiative that has advanced rapidly at Onyx -- and Bayer is exploring the utility of -- adding Nexavar to existing drug regimens, to treat the most common tumor types -- which have been shown to be responsive to antiproliferative and/or antiangiogenic agents.

Under this development plan, we were focusing initially on lung and breast cancer -- two diseases with very large patient populations, that could potentially benefit from Nexavar's tolerability, oral administration and combinability.

For these trials, we are partnering with key opinion leaders, to explore many studies simultaneously.

In non-small-cell lung cancer, a 900-patient pivotal Phase 3 trial is underway.

In this study, previously untreated lung cancer patients are receiving Nexavar or a placebo, in combination with carboplatinum Paclitaxel -- standard chemotherapeutic agents for lung cancer.

We expect to complete enrollment in this trial later this year.

And it's worth noting that this trial includes patients with all histologies.

Not just adenocarcinoma patients, but also patients with squamous-cell carcinoma.

Because we cannot rule out some of the safety issues that [inaudible] experienced in the squamous-cell population, our data-monitoring committee is routinely looking at the safety of administering Nexavar to squamous-cell cancer patients.

Though we do not comment on specific data reviews, we can tell you we're continuing to accrue all patients with all histologies in this trial.

We are also enrolling patients in -- or planning -- randomized Phase 2 lung cancer studies, including a large 3rd-line study, sponsored by the Eastern Cooperative Oncology Group -- or ECOG.

Nexavar is ideally positioned to enter this market in particular, not only because of increasing use of targeted therapies earlier in the treatment of non-small lung cancer, but also because of its oral administration, tolerability and potential combinability with other agents.

In breast cancer, we're capitalizing on the clinical community's strong desire to explore the efficacy of Nexavar in a broad range of disease and treatment settings -- including and in combination with chemotherapy, hormonal therapy and other targeted agents.

Remember -- for patients who are progressed with breast cancer, the goal is to extend survival, while maintaining quality of life.

And Nexavar could be ideally suited to accomplish these goals.

We are now in the last stages of designed, planning and finalizing protocols for a comprehensive program of international randomized Phase 2 studies in breast cancer.

And we expect to initiate pivotal trials this year.

We look forward to updating you on this extensive clinical development program, designed to demonstrate Nexavar's utility in a number of different cancers and treatment settings.

At Onyx, we are committed wholeheartedly to changing the way cancer is treated.

We are developing Nexavar for patients who previously had little or no hope, due to limited treatment options.

Nexavar is well-tolerated treatment that can be readily managed and administered at home.

It is an oral therapy that's convenient and doesn't require infusion.

We believe that Nexavar is a simple and effective treatment, that can serve as a building block for combinations with other new treatments.

Now I'll turn the call over to Greg.

Thank you, Hank.

Net worldwide sales of Nexavar were $63.7 million for the 4th quarter, and $165 million for the full year of 2006.

Fourth quarter sales were a 40% increase over the $45.4 million recorded in the 3rd quarter.

Net US sales were $35 million -- which included a 1-time order of $5.2 million.

Sales outside of the US were $28.6 million.

As a reminder, while we share profits worldwide -- except in Japan -- all Nexavar revenue is recorded by Bayer.

In 2007, we anticipate further revenue growth outside of the US, as Bayer continues to enter new markets and more fully penetrates those where approvals have already been secured.

At the same time, we expect new entrants in the US kidney cancer market.

Because of these dynamic market conditions, and the recent results in liver cancer and melanoma, we are not providing 2007 revenue guidance at this time.

For the 3 months ended December 31st 2006, Onyx reported a net loss of $20.7 million, or $0.47 per share -- which included stock-based compensation of $3.2 million.

For the full year, Onyx reported a net loss of $92.7 million -- or $2.20 per share -- which included stock-based compensation of $14 million.

Onyx's net expense from the unconsolidated collaboration with Bayer, was $3.8 million -- and $23.9 million for the 4th quarter of 2006 and the full year, respectively.

As you know, Onyx's direct expenses associated with Nexavar are included with our other direct expenses, in the R&D and SG&A line items of our income statement.

Total share development expenses under the collaboration were $41.1 million for the 4th quarter of 2006, and were essentially the same as those incurred in the 3rd quarter.

On an annual basis, share development and costs under the collaboration were $161.2 million -- significantly more than what was incurred in 2005 -- reflecting our expanded clinical development program for Nexavar.

Shared Nexavar sales and marketing expenses -- including cost-of-goods-sold and distribution expenses -- were $49.2 million for the 4th quarter of 2006.

This was a significant and expected increase over the 3rd quarter of this year -- resulting primarily from expenses associated with Bayer's staffing and launch activities outside of the US.

Similarly, first-year shared sales and marketing expenses increased from the prior year, to $123 million, as a result of worldwide prelaunch and commercialization activities.

Onyx's direct SG&A of $13.1 million in the 4th quarter of 2006 increased from 11.9 million when compared to the 3rd quarter, due to an increase in Nexavar marketing expenses incurred by Onyx.

Our SG&A expense line includes the cost of our US sales force, the portion of shared Nexavar marketing expenses that we incur directly, and the costs that we incur for general and administrative support of the Company.

Total stock-based compensation expense for the 4th quarter was $3.2 million, or $0.07 per share.

Half a million dollars of this is reflected in the R&D line item, and $2.7 million is in the SG&A line item.

For the full year of 2006, we recorded stock-based compensation of $14 million -- of which $2.5 million was included in the R&D line, and 11.5 million in the SG&A line.

At December 31st 2006, we had cash, cash equivalents and marketable securities of $271.4 million -- as compared to $284.7 million at the end of 2005.

This includes $4.4 million of marketable securities, classified as long-term on a condensed balance sheet.

Now I will turn the call back over to Hollings.

Thanks, Greg.

We believe we are in a stronger position than ever to establish Nexavar as part of the global standard of care for patients living with many types of cancer.

We are only just beginning to capitalize on this opportunity.

We and Bayer are successfully launching the drug around the globe for advanced kidney cancer, where we have seen rapid uptake, sales growth and market expansion.

And earlier this week, based on a recommendation from the independent data-monitoring committee, we stopped our pivotal Phase 3 in advanced liver cancer, due to superior overall survival in the treatment arm.

We and Bayer intend to pursue an additional filing for this indication as quickly as possible.

If approved in this indication, Onyx and Bayer will be able to utilize the global infrastructure that has been put in place for advanced kidney cancer.

And the Phase 2 melanoma study demonstrates Nexavar's preliminary activity in yet another tumor type -- and in combination with a standard chemotherapy regimen.

In addition, the drug's unique attributes of oral availability and combinability with standard regimens in breast and lung cancer create additional opportunities to realize what we believe to be a huge global opportunity.

2007 promises to be another eventful and busy year.

It certainly started on a great note as we broaden our international franchise and presence in the kidney cancer market, develop launch plans for liver cancer, and advance our development programs across tumor types and treatment settings.

In 2007, we plan to report results from our Phase 3 liver study, as well as our Phase 2 melanoma study -- combining Nexavar with DTIC, and to articulate our next development steps in this disease.

We expect to file for approval to market and prepare to launch Nexavar around the world for its second indication in liver cancer.

We also expect to complete enrollment of the Phase 3 lung cancer trial, where we continue to enroll all histologies -- and look forward to the initiation of multiple company- and investigator-sponsored Phase 2 studies in breast and lung cancer.

We expect to be prominent both commercially and scientifically at the major medical conference this year, and will let you know in advance about papers being presented at these and other key meetings.

We are more optimistic than ever about our future prospects, the potential for Nexavar and our ability to bring valuable treatments to patients who very critically need them.

Thank you for your time and continued interest in our success.

We would now be happy to take questions.

At this time, I would like to remind everyone, in order to ask a question, simply press *, followed by the number 1 on your telephone keypad.

If you would like to withdraw your question, please press *, then the number 2 on your telephone keypad.

We will pause for just a moment to compile the q-and-a roster.

Our first question comes from the line of Steve Harr with Morgan Stanley.

Good afternoon, Steve.

Good afternoon.

How are you guys?

Great.

Thanks.

I apologize for the background noise.

I just wanted to get a better understanding of some of the trends that you guys are seeing in the renal market.

If you look at your European growth, is this driven by increased penetration in different countries?

Or are you plateauing in Europe like you are in the United States, in each country and on a country-by-country basis?

Right now, your growth is coming from approvals in pricing on a country-by-country basis.

Yes.

Steve, in general, we're very pleased.

Not only with the aggregate results of 165 million -- and the 4th quarter sales of 64 million -- but as noted, we had $28 million of revenues in the EU.

In general, that growth results from some increased penetration in the earliest market -- which was in Germany -- as well as launches that Bayer had made during that 4th quarter in France and Italy.

Spain has just recently come online this quarter.

So it's a combination of some growth in market in Germany, as well as launches.

So we should expect as you continue to roll new countries on, that European growth will continue.

I would expect to see some additional European growth.

Yes.

What kind of trends are you guys seeing in the United States, in your market share battle with StuGent?

First-line use?

Second-line use?

Where are you seeing the bastion playing out, right now?

I think Number 1 -- in an aggregate basis, as I say, we're very pleased with having a solid market share.

Our judgment is, it's probably 35% of the market.

The statistics are probably not as clear about line of setting.

So I don't have really good data to [inaudible] there.

But it's probably roughly of the orals, 65/35.

I know it's early days, but what type of commercial infrastructure expansions do you think are going to be necessary to maximize the [inaudible] opportunity?

Let me have Ed talk a little bit about the US.

Yes.

Hi, Steve.

We really have got the core infrastructure already in place.

This is another targeted market for us.

It's not going to require armies of folks.

So we feel very, very confident that the existing growth -- that both we and our partner are the basis -- the foundation.

We're looking now at some analyses about exactly how that's placed, and so forth.

But no major changes.

We've got a really solid group in place -- ready to move in that direction.

And that'll happen between now and launch.

And the other thing I would say, Steve, is that Bayer have in place infrastructure now around most of the certainly major territories.

And with the combination, with Schering -- actually bolstered that capability.

So it's pretty much in place, and it'll be relatively incremental adds.

As you probably are aware, the [HUC] opportunity is larger.

Ex-US.

I don't rightly want to give necessarily any guidance about what it means incrementally in some of the territories outside of the US.

Good.

Thank you.

Next question?

Our next question comes from the line of David Witzke, with Bank of America.

Hey, David.

[inaudible] [Sargent] on behalf of David.

Oh.

Hi.

Hello.

Congratulations on a great quarter.

I was wondering if you could comment any further on duration of therapy.

Where you're seeing that at, and what type of an increase you're seeing, quarter-over-quarter?

Well, we're getting a better handle around that, but we haven't really gone public with that.

In general, the one thing I would say is, there's not a lot of difference in the duration of therapy between 1st- and 2nd-line patients.

But we haven't gone public with the exact numbers.

And do you have any guidance about the percentage of patients in the EAP that have applied with HCC?

No.

The EAP was a program that we initiated before the launch in kidney cancer.

There have been some usage outside of kidney cancer in 2006 in melanoma, liver, and in lung cancer.

But it's been relatively nominal, to date.

Okay.

Great.

Thank you very much.

Thank you.

Our next question comes from the line of Brian Rye, with Janney Montgomery.

Good afternoon, and again congratulations on the solid quarter and the clinical development progress, Hollings.

Thanks, Brian.

Just a couple of housekeeping questions.

In looking at the cash balance, I presume that you all utilize the [inaudible] financing vehicle that you announced back in September.

I was wondering if you could give maybe a little more details on how many shares were issued, and maybe what the current share count is as we sit here, today.

And then secondly, we were just curious about the status of the Japanese application for approval in renal-cell carcinoma.

On the first, we did have the staff.

We did draw down 75 million.

It was about 4 million shares that we issued in conjunction with that.

In the case of Japan, that's filed.

And I think it's going to happen sometime this year, but we can't be exact.

So it's in the regulatory process there, but it's filed.

Okay.

Sounds good.

Thanks, Hollings.

Thank you, Brian.

Our next question comes from the line of George Farmer with Wachovia.

Hi.

Thanks for taking my question.

Hi, Hollings.

I know you can't comment on revenue guidance for '07, but can you talk about any significant clinical trials where both traditional bulk material may be purchased from a majority [inaudible]?

Yes.

I think that would be a little bit speculative.

I think in general, we did have this one order that had mentioned -- and we know there are other agents out there that may be looking to look at combinations with Nexavar in the kidney cancer space.

But I think those are really difficult to predict -- when they might happen or how much they might be.

So I think it's very hard for us to do that.

I guess I would caution people maybe to think about that as a one-time.

Even though there may be some other things, I wouldn't build that into an everyday order.

Yes.

And any insight onto how other Phase 3 trials are going on, including the ECOG melanoma trial?

And correct me if I'm wrong -- there should be a front-line RCC Phase 3 trial ongoing?

Hank?

Yes.

The ECOG trial in melanoma has maybe passed the 1/3 way.

And it's an 800-patient overall survival study.

And it's a 1st-line study with carboplatinum Paclitaxel in patients who are randomized to receive either Nexavar or a placebo.

And when you say 1/3 of the way, that's 1/3 enrollment, or 1/3 --

1/3 enrollment.

Okay.

Yes.

It's past that point.

And at last count, it was enrolling in the high 20s per month.

These are public information, available from ECOG.

Yes.

Our 1st-line kidney cancer trial, we do not have a Phase 3 trial going on in first-line kidney cancer.

Not a first-line randomized Phase 3 trial.

But we did report at the end of last year, the results of our 1st-line Phase 2 study, though.

In kidney cancer, we do have -- I should say again -- the cooperative group has underway an adjuvant study in kidney cancer in the US, comparing Nexavar to placebo.

That's a study that'll take a few years to generate data out of that.

And we a similar study planned in Europe that the design has 2 arms of Nexavar against a placebo, there.

And then Hank already mentioned the lung study -- the Phase 3 lung study -- as being a major one.

There are other studies in liver cancer, including some studies in Asia and Japan, and combination studies.

So there's still other data being generated there, as well as a series of other investigator-sponsored trials that could be the subject of presentations at various meetings throughout the year.

Any plans for the joint venture to consider colorectal cancer as a potential indication?

I think we're looking at a number of different cancers.

And as we make some decisions about commitments to those, we can indicate that.

But at this time, we don't have any specific plans in colon or some of the other tumors.

Although there are some ISPs out there for some of these other diseases.

All right.

Thanks.

Yes.

Next question?

Our next question comes from the line of Gene Mack, with HSBC.

Hi, Gene.

Hi.

Thanks for taking the question.

Just wondering.

I know you've got to be careful when you talk about off-label sales.

But can you maybe just talk a little bit about what you think the potential might be, given the fact that there's nothing else really in melanoma, to use alongside DTIC, when the results are reported [inaudible] in that Phase 2 trial?

Yes.

We won't make any projections around outside of the label use.

In melanoma, as Hank was alluding to in his comments, we are encouraged by this preliminary Phase 2 signal out of this well-run, independently-reviewed combination with the DTIC.

I think the path forward there, though, is we need to complete that trial, present the data, talk to regulators, talk to the key opinion leaders, and decide whether it's a compendia strategy or whether we actually initiate a larger Phase 3 study.

Is there anything you can tell us about the differences between using this type of oral therapy, off-label in cancer versus some of the injectable products?

I think there are some differences in Part B versus Part D regulations.

But I think in general, it's mainly governed by the way that the products are generally reimbursed, as opposed to anything.

There are a few wrinkles, but they're probably not worth really getting into a lot of detail on it.

Okay.

Thank you.

Yes.

Our next question comes from the line of Jason Zhang with Prudential.

Hi, Jason.

Yes, hi.

I wanted to look at [inaudible] a little more.

If you [inaudible] the 5.2 million special order, you answered that you really had about 30 million [inaudible] from [inaudible].

And that's about a 2 million increase from your last quarter's sales.

And also, if you consider your competitors, [Suten] had actually about 69 million in sales in the US during the 4th quarter.

But that was down from 98.

So my point is, are you seeing a saturation of RCC, assuming the majority of the sales to date is from RCC.

And so that probably would give you an idea what the real market is in the US.

And also, to compare that to Europe today, how much room do you think you still have left for RCC, assuming how much sales you got and on top of that, how much sales [Suten] has got.

And also, providing that -- the market from Europe is probably similar to the US market -- if not smaller.

Yes.

Well generally, I would say that in terms of looking at market growth, we think there's additional room for market growth as the patients with kidney cancer continue to benefit from the newer therapies that are already on the market, and some of those that could come.

As you probably know, if you looked at all different risk-factor groups the average overall survival is probably in the range of 12 months.

And clearly, there's been an additional benefit by the agents that are already approved, and likely to continue to be the case.

So our view is that the market could continue to grow.

Obviously, I think you're recognizing another phenomenon -- which is -- there was a very rapid uptake.

I mean, since it was such an unmet need, patients have quickly come onto one of these two agents.

So I think it's probably a little bit speculative to say what the growth would be beyond this.

I think they have to wait and see what happens with the other products that come along.

In general, my own personal view is -- I think sales outside of the US will be bigger than the US.

So I talked -- in answer to Steve's question -- about the fact that some of the major European territories have been launched.

There's going to be some additional launches in other places.

So I think there's room for growth in Europe or in Ex-US.

Okay.

Thanks.

Yes.

Next question, please.

Once again, ladies and gentlemen, if you would like to ask a question, simply press *, followed by the number 1 on your telephone keypad.

Our next question comes from the line of Jim Reddoch with FBR.

Hey, Jim.

Good afternoon.

Can you hear me okay?

Yes.

I noticed that on the side P&L for Nexavar that the cost of goods in SG&A line was up 67% from the 3rd quarter.

And it just seems like virus launches -- it's probably been going on since the 3rd quarter, so it seemed like a pretty big jump.

Were there any special promotions or rebates or one-time costs?

Or potentially was it hirings that happened in the 4th quarter versus the 3rd quarter?

Thanks.

Yes.

Well those, as Hollings mentioned, we're launching around the world and getting approvals in multiple countries.

The number now is 50 or plus countries.

So you're just seeing that reflected in the sales and marketing expense, and the RW sales force expense.

Can you say when that starts to plateau out?

Well, we're not making any guidance at this time, just given the news that we've had.

Okay.

Thanks.

Next question?

Our next question comes from the line of Eric Ende, with Merrill-Lynch.

Hey, Eric.

Hey.

How are you?

Great.

Two quick questions.

First of all, was there any stocking that we should know about in the Ex-US sales?

And then secondly, what kind of mechanism is in place to prevent Bayer from jamming expenses into the JV?

As to the first -- in Ex-US, we don't have the same closed distribution system.

So it's really hard to break out anything that would be considered stocking, I would say.

So we don't have that information.

As to the second question, it's very clear -- we have to agree with Bayer on development in US spends.

So that's a 50/50 approval.

Either party can veto the other.

And generally, we've been able to agree.

I think the bottom line is, we've got very similar alignment, because we have the same 50/50 interest.

That's all spending?

That include R&D and SG&A?

Yes.

Okay.

Great.

Thanks.

Our next question comes from the line of Richard Smith with JP Morgan.

Hey, Richard.

Hey.

Good morning.

Or good evening.

With the Phase 2 in HCC, if you don't mind, how long were the patients treated in that trial with Nexavar?

The 137 patients Phase 2 -- I think the only data that I'm on top of, unless Hank has something to add, was the TPP was 4.2 months.

They were treated to progression?

You know, I don't have that.

Hank, do you know anything?

No.

No.

I don't think we have that.

That study was published in JCL, I think, recently.

I don't remember it off the top of my head, but I don't recall it.

You think it's in the article?

No.

I think you can look at the article and see whatever information had been gathered would be in that article.

All right.

Thank you very much.

Thanks a lot, Richard.

Next question?

Our next question comes from the line of Leland [Gerschel] with [Gowen & Company].

Thanks for taking my question.

And congratulations again on a great quarter.

I wanted to ask on when we might have a sense of, and/or see, the Phase 3 data for all survival in renal cancer?

I don't think we put out a specific timeline for that.

That's a 540 event analysis.

Obviously, we've had 2 analyses.

One was prior to the crossover, and then one was the 300-some odd events.

I don't remember, exactly. 367 events.

And in both cases, the P-value was very attractive.

I think it was in the 0.01 level.

But what we've said kind of consistently is that we would expect that the benefit over time of Nexavar would begin to show up.

So I think whenever we get that data, we wouldn't be surprised to see that the placebo arm's going to continue to get better.

Okay.

Great.

Then one last question.

I know you're not offering any revenue guidance for the year, but any expense guidance we might be hearing on?

No.

I think this is a very fluid time, as we're now looking at a launch in the 2nd -- A filing and a launch.

A potential launch and a second indication.

So it's very premature for us to provide guidance.

Fair enough.

Thanks for taking my question.

Yes.

Thanks a lot.

Jason, we'll take one more question.

At this time, if you would like to ask a question, please press *, then the number 1 on your telephone keypad.

We will pause for just a moment to compile the q-and-a roster.

Our final question for the evening is a follow-up from the line of Jason Zhang with Prudential.

Okay.

Jason -- one more.

Okay.

Good.

Apparently, with very good HBC data, and I wonder whether the company's strategy of in-licensing other products has changed, or you would take that advantage of the market opportunities to increase your cash position to be able to be more flexible in pursuing other product candidates.

Yes.

So I think that fundamentally, the desire that we have to access other products is the same, irrespective of the HCC.

Obviously, we have a little more financial flexibility with the revenue flow from there, as well as potentially accessing capital markets.

But I think the strategy is still fundamentally one where we're looking for things.

It's a tough market.

Everybody else is out there looking, and the prices are pretty expensive, so we've got to be pretty selective.

But we have been, and we will continue to look at appropriate assets.

Thanks.

Yes.

Okay.

Great.

Thanks a lot.

Thank you, everybody, for joining us -- and for all the good questions.

We look forward to seeing you, as well as speaking with you at not only the upcoming financial and medical meetings, but also on these regular calls.

So thanks again.

Stay tuned.

That does conclude today's teleconference.

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