美國安進 (AMGN) 2007 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the third quarter financial results conference call.

At this time, all participants are in a listen-only mode.

Later, we will conduct a question-and answer session.

Please note this conference is being recorded.

I would now like to turn the call over to Onyx Pharmaceuticals.

You may begin.

Thank you.

Good afternoon.

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

We thank you for joining us today for our third quarter financial results conference call.

Joining me today on our call are Onyx CEO Hollings Renton; Laura Brege, our Chief Operating Officer; Hank Fuchs, our Chief Medical Officer; and Greg Schafer, our Chief Financial 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 10-K for the year ended December 31, 2006, and our more recent filings with the SEC.

Our 10-Q for the third quarter of 2007, including updated risk factors, is expected to be on file later this week.

Now I'd like to turn the call over to Hollings, who will provide a brief overview of the quarter.

After Hollings' remarks, the management team will walk through the commercial, clinical and financial highlights.

Thank you, Julie, and welcome, everyone.

This is an exciting time at Onyx with a growing oncology business, a recent regulatory approval in the European Union and active filings globally for a second indication, as well as a robust clinical development program.

In the third quarter, Nexavar global net sales exceeded $100 million for the first time.

This represents an increase of 29% over the last quarter and 130% over the third quarter of last year.

This revenue growth was driven by strong performance in both the United States and in the rest of the world.

Nexavar's a proven drug for the treatment of kidney cancer.

It is now approved in more than 60 countries worldwide for that disease.

Nexavar has also shown a survival advantage in liver cancer in three randomized clinical trials.

We expect approval in liver cancer to drive top line growth through 2008 and beyond, with several additional liver cancer studies planned and many other trials underway in various cancer indications, representing further significant upside potential.

In addition to strong third quarter sales, we and Bayer made great strides towards securing approval of Nexavar for patients with liver cancer in Europe and in the United States.

We and Bayer reported just last week that the European Commission granted marketing authorization to Nexavar for the treatment of patients with liver cancer.

The rapid of time from filing to approval, as well as the broad label, underscores the tremendous unmet need in this marketplace.

Nexavar is the only approved systemic therapy for liver cancer in Europe.

Also during the third quarter, the Supplemental New Drug Application, or SNDA, for Nexavar was granted priority review status by the FDA.

We anticipate approval in the liver cancer indication this quarter and are on track to launch immediately thereafter.

During the third quarter, an Asia-Pacific regional Phase III trial of patients with liver cancer was stopped early when an independent data monitoring committee found that Nexavar significantly improved overall survival, progression-free survival and time to progression.

These study results support that Nexavar's efficacy and tolerability in liver cancer extend across ethnic groups and geographies.

Data from this study will be submitted for presentation at a scientific meeting next year.

We plan to initiate additional studies to expand the benefits of Nexavar to liver cancer patients throughout the course of their illness, including as an adjuvant treatment in earlier stages of the disease.

With no other systemic therapy approved for liver cancer, we believe Nexavar's poised to become the new standard of care for this disease.

We believe Nexavar's multi-kinase activity, tolerability and convenient oral dosing make it the ideal drug candidate to benefit patients with many different types of cancers.

In addition to kidney and liver cancers, we're actively evaluating Nexavar in non-small cell lung cancer, melanoma and metastatic breast cancer.

With a proven drug and extremely successful collaboration with Bayer, outstanding commercial teams launching or ready to launch in a second indication and a comprehensive joint development program, we look forward to the continued growth of the Nexavar franchise.

There has been enormous change and tremendous progress in the 15 years that I have been at Onyx, and I look forward to many more years of progress and success.

As previously announced, I am retiring as CEO next year, but will continue as chairman.

I'm extremely confident in the management team and in the organization's ability to fulfill our vision of changing the way cancer is treated.

It is my pleasure to now turn the call over to Laura Brege to highlight our commercial progress with Nexavar.

Thank you, Hollings.

Together with Bayer, we have established Nexavar as an important agent in the treatment of advanced kidney cancer.

As Hollings mentioned, in the third quarter we continued the positive sales momentum, both domestically and internationally, achieving global net sales of $104.6 million.

Third quarter sales included approximately $41 million generated in the United States and approximately $64 million outside the U.S.

This growth reflects a 26% increase over the previous quarter's U.S.

sales numbers and a 30% quarterly increase in sales throughout the rest of the world.

We see the overall growth of the kidney cancer market as moderating after the introduction and rapid uptake of the new targeted therapies.

Due to the increased number of drugs approved over the last few years, physicians now have alternatives and patients are benefiting from these options, as many of them are being treated sequentially with multiple agents.

Despite the increasingly competitive marketplace, Nexavar continues to play a significant role in providing therapeutic benefit to patients worldwide.

The growth in third quarter sales was driven primarily by uptake in liver cancer following the positive plenary data presentation at ASCO this past June.

In addition, in October the National Comprehensive Cancer Network, or NCCN, updated their guidelines for the treatment of liver cancer.

Nexavar is now included in these guidelines as a treatment option for metastatic disease and for patients with unresectable disease or those who decline surgery.

In the short term as well as over the longer term, we expect that worldwide sales of Nexavar in the treatment of liver cancer patients will drive revenue growth.

As was the case with the introduction of effective therapies for advanced kidney cancer, we anticipate that the number of liver cancer patients receiving systemic therapy for their disease will expand significantly.

Liver cancer is the sixth most common tumor worldwide and the third-leading cancer killer globally, with approximately 15,000 deaths in the United States and 60,000 in Europe, half of which are in the five largest European countries.

Beyond the U.S.

and Europe, over half a million people die annually from this disease.

Nexavar has the potential to help the many thousands of patients worldwide suffering from liver cancer.

We anticipate rapid uptake following the launch of Nexavar for this indication and intend to leverage our first-to-market opportunity to drive top line growth.

In the European Union, following the recently announced approval for liver cancer, Bayer is moving forward with launch plans.

In certain countries, sales can occur immediately, while in others it will take longer to obtain reimbursement.

In addition, Bayer has filed for the liver cancer indication in a number of regions, including Asia, most notably China and Japan.

In anticipation of this potential second indication in the U.S., we and Bayer are finalizing our commercial launch activities to ensure clinicians and patients will have access to Nexavar immediately upon approval.

The U.S.

commercial team has prepared a comprehensive launch plan, including a detailed targeting analysis of physicians treating liver cancer patients, as well as those treating patients with liver disease.

In addition, the sales organization has undergone extensive pre-launch training.

And through our medical affairs initiatives, hematologists and oncologists specializing the management of liver cancer as well as a broad range of other clinical care providers have been engaged to ensure that all patient needs are addressed at the time of drug approval.

I would now like to turn the call over to Hank Fuchs, who will provide an update on our development program.

Thank you, Laura.

As you know, we are studying Nexavar as both monotherapy and in combination with other anticancer agents in a variety of tumor types and settings with the goal of amassing comprehensive data that we will -- that we believe will ultimately lead to additional and better treatment options for cancer patients.

In September, at the 14th European Cancer Conference, data from a 100-patient randomized Phase II study comparing Nexavar plus doxorubicin to doxorubicin alone in liver cancer patients was presented.

Recall that in February of this year, we and Bayer accepted the recommendation of the independent monitoring committee to stop this study early because patients receiving chemotherapy alone were thought to be at considerable disadvantage.

The data showed the Nexavar plus doxorubicin doubled the overall survival to 14 months as compared to seven months for those patients taking doxorubicin alone.

The hazard ratio was 0.45 and the P value was 0.0049.

There were no major differences in the rate of serious adverse events between the two arms.

In lung cancer, we are exploring the utility of adding Nexavar to existing drug regimens.

In May, we completed patient enrollment in a large pivotal Phase III trial in advanced non-small cell lung cancer.

This trial includes patients with all histologies.

These previously untreated patients are receiving Nexavar or placebo in combination with carboplatin and paclitaxel.

The primary endpoint is overall survival, and we anticipate having data from this study in the second half of 2008.

In addition, we have a second pivotal non-small cell lung cancer trial ongoing in Europe using another chemotherapy doublet, one that is more commonly used in that region.

In order to achieve the most meaningful statistical outcome and the broadest possible label, we are in the process of expanding enrollment in this study to 900 patients with all histologies and adding overall survival as a co-primary endpoint in addition to progression-free survival.

In this trial, patients are receiving Nexavar plus or minus gemcitabine and cisplatin.

We expect to complete patient enrollment in this study by the end of 2008.

A Phase III trial sponsored by the Eastern Cooperative Oncology Group, or ECOG, continues to enroll chemo nave advanced melanoma patients.

This study is designed to compare overall survival of patients with -- treated with carboplatin and paclitaxel for treatment with these agents plus Nexavar.

We anticipate enrollment in this study will be completed in 2008.

In breast cancer, we have launched a comprehensive multinational program in collaboration with renowned breast cancer experts.

Enrollment has begun in three of these large randomized, double-blind, placebo-controlled Phase II trials for patients with HER2 negative metastatic breast cancer comparing Nexavar to placebo in combination with chemotherapy, hormonal therapy or other targeted agents.

Each trial will enroll approximately 220 patients, and the primary endpoint across the program is progression-free survival.

Our goal with the program is to screen effective therapies and to better inform Phase III clinical development.

In summary, with demonstrated efficacy in two previously underserved cancers and a broad clinical development program designed to leverage Nexavar's combinability, tolerability and oral administration, we believe that Nexavar is well positioned to make a significant mark in the treatment of cancer.

I'll now turn the call over to Greg Schafer.

Thank you, Hank.

Net worldwide sales of Nexavar increased 29% to $104.6 million in the third quarter of 2007 as compared to sales of $81.3 million in the second quarter.

This corresponds to an increase of 130% when compared to Nexavar net sales of $45.4 million in the third quarter of last year.

As a reminder, Onyx and Bayer share profits worldwide, except in Japan, and all Nexavar revenue is recorded by Bayer.

The strong growth in Nexavar sales tipped us into profitability for the quarter, with reported net income of $555,000, or $0.01 per share.

This included employee stock-based compensation charges of $3.6 million, or $0.07 per share, and compares to a loss of $10.8 million, or $0.22 per share, in the second quarter and a loss of $20.1 million, or $0.49 per share, in the third quarter of last year.

For the nine months ended September 30, 2007, Nexavar sales as recorded by Bayer increased 144% to $246.8 million as compared to sales of $101.3 million in the nine months ended September 30, 2006.

Onyx's net loss was $22.5 million, or $0.45 per share, during the first nine months of 2007 as compared to $72 million, or $1.74 per share, in the comparable nine-month period of last year.

As a reminder, 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 $37.6 million for the third quarter.

These expenses were higher than those incurred in the second quarter due to the expansion of clinical trial activity in lung and breast cancers and preparation of the regulatory submissions for liver cancer.

Shared Nexavar sales and marketing expenses, including cost of goods sold and distribution expense, were $56 million for the third quarter of 2007, an increase from $49.3 million in the second quarter, as Nexavar's use continued to expand throughout the world and as Bayer and Onyx prepare for anticipated launches in liver cancer.

With our continued investment in Nexavar, we anticipate full year 2007 shared development expenses to increase in the fourth quarter and to be near the 2006 level for the full year.

We also expect shared SG&A expenses to continue to increase in the fourth quarter as we launch Nexavar in liver cancer.

Onyx's direct SG&A expense of $15.2 million in the third quarter of 2007 was slightly lower than that recorded in the second quarter, primarily due to a reduction of marketing expenses at Onyx.

Our SG&A expense line item includes the cost of our U.S.

sales force, the portion of shared Nexavar marketing expenses that we incurred directly, and the costs that we incur for general and administrative support of the Company.

Total employee stock-based compensation expense for the third quarter of $3.6 million included $2.8 million in SG&A and $800,000 in R&D.

At September 30, 2007, we had cash, cash equivalents and marketable securities of $451.2 million as compared with $271.4 million at December 31, 2006, and $454.4 million at the end of last quarter.

Now I will turn the call back over to Hollings.

Thanks, Greg.

We and Bayer are committed to delivering on our strategic plan to maximize our investment in Nexavar across multiple tumor types on a worldwide basis.

This is based on the statistical and clinical significance of our data, the enthusiastic response from the clinical community and the testimonials we hear from patients.

With the recent regulatory action in the European Union and anticipated regulatory actions in the United States and elsewhere for liver cancer, we believe we are well on our way toward achieving our long-term strategy for sustained growth and profitability.

Looking ahead, we intend to continue our strong milestone momentum through 2008, including regulatory actions in liver cancer for Nexavar in the U.S.

and the rest of the world, commercial launch of Nexavar for liver cancer as we obtain approvals from regulatory authorities and reimbursement authorizations where necessary, presentation of the results of the Phase III Asia-Pacific liver cancer trial at an upcoming scientific meeting, reporting top line results from our first Phase III study in non-small cell lung cancer, as well as completing enrollment in our second Phase III lung cancer trial and in collaboration with outside investigators, initiating two additional Phase II studies in lung cancer, completing enrollment in the Phase III ECOG study, evaluating overall survival in front-line patients with metastatic melanoma, continued implementation of our breast cancer program with additional Phase II studies getting underway to evaluate Nexavar in combination with other treatments and in other settings, and further expansion of the clinical development program and a continued presence at key clinical meetings with presentations of Nexavar data generated in a variety of different tumors.

We are proud of our track record of delivering on our commitments to provide an oral, well-tolerated, combinable agent to cancer patients with unmet medical needs.

In addition to ongoing sales growth in 2007, we have reported positive liver cancer data from three studies, filed worldwide for a second indication for Nexavar and approved in the European Union for the treatment of liver cancer, completed enrollment in a Phase III lung cancer study, and expanded our clinical development program.

With these important achievements and many events pending, we look forward to making Nexavar the systemic standard of care for patients with liver cancer and look forward to what we believe will be an exciting 2008.

We will now take your questions.

Operator, could you see if there's any questions?

Yes, thank you.

(OPERATOR INSTRUCTIONS)

We have Steve Harr from Morgan Stanley.

Please state your question.

I want to get just a little better sense for what's driving some of the growth that you're seeing with Nexavar.

And in the U.S., is it -- I know you don't want to break down on and off label sales probably, but is it fair for us to assume that almost all our growth is occurring in hepatocellular carcinoma?

And in Europe, is it fair for us to assume that almost all growth is occurring because of, I guess, the combination of the dollar weakening, but more importantly, new country approvals?

Yes, Steve.

So, in terms of the overall growth for the quarter, that was largely driven by liver cancer uptake prior to approvals.

So that's the primary driver and probably a little bit more so in the U.S.

than in Europe.

But we don't really break it out that much.

Clearly, Europe we are getting some benefit in addition from some ongoing launches as well as some currency exchanges.

We are seeing a very -- worldwide globally a pretty stable RCC and use outside -- off label outside of liver cancer, so we're pretty encouraged about the position that we have.

So is there off label sales, I'm sorry, in Europe?

There is some use in liver cancer prior to this recent approval, and some of it occurs through a variety of different mechanisms, whether it's named patient basis or through hospital formularies or other approaches.

Great.

Thank you.

Your next question comes from Katherine Kim from Banc of America.

Please state your question.

Yes, hi.

Can you hear me?

Yes, sure can, Katherine.

Okay.

Congratulations on a great quarter by the way.

Thank you.

So, in terms of Europe, how does reimbursement occur for off label use?

Laura, you want to talk a little bit about the process because it's different on a country-by-country basis.

In certain EU countries, such as Germany, sales can occur immediately and mechanisms are place for that, while in others it takes longer to obtain reimbursement.

Different hospitals and formularies provide support for patients who need drugs, which have been studied but not yet approved.

Okay, so it's fair to assume that in the fourth quarter you will have off label use in other countries in Europe?

Is that fair to assume that?

With the approval coming in the EU in the fourth quarter, I think that it's fair to expect that most of our sales, in fact, will be with the label and approved.

Okay.

And then my question -- my next question is on Asia.

You have recently filed for approval.

When do you think that you could get official approval of that, and what is the process in terms of emerging -- in the emerging markets such as China?

Yes, hi.

This is Hank.

So, as we've mentioned, we've had -- Bayer has done a really outstanding job of having interactions with various Asian health authorities, including the Chinese health authority and the Japanese health authority, to understand requirements for registration in those regions.

And what we've said about that is that the regional health authorities require primarily the data from the [Sharps] clinical trial to attest to the efficacy of the product and have requested additional studies to be conducted locally, primarily to augment the safety experience.

In China, as you know, we've talked about the need for a smaller randomized trial, conducted primarily in China but also in Taiwan and Korea, to evaluate the -- primarily on the safety of Nexavar in Asian patients.

That study has been completed and, in fact, Hollings reported earlier that that was a study that was unblinded, and efficacy was demonstrated, even though that wasn't a requirement.

So those data will be provided to the Chinese health authority.

And as to the process of ongoing negotiations with the health authorities, we don't generally comment on that.

In Japan, the pattern is fairly similar.

We've met with the health authorities.

We understood the requirements for registration.

There we have an ongoing trial in combination with chemoembolization, a predominant mode of therapy for hepatocyte carcinoma in Japan.

That study continues to enroll.

And again, we won't be in a position to comment on the regulatory process of those discussions until they're more mature.

Okay.

And have you done a preliminary analysis of the market potential in emerging markets such as China?

Yes, certainly we've looked, Katherine, at the incidence.

I think as you probably know, the disease is much more common outside of the United States, regardless of what data you look.

It's in the range of something like 13,000 to 15,000 deaths in the U.S.

But if you go to Europe, it's almost 60,000 in terms of incidence and death, very close to the same thing, with about half of that occurring in the top five countries.

So it's a much larger disease, and we think it's very significant in the U.S.

and in Europe.

In Japan it's a little under 40,000, I'd say, was the incidence and death.

And then if you look into China, for example, it's over 300,000.

So it's obviously a very significant disease.

The big issue in terms of trying to evaluate the potential there is the lack of reimbursement.

And so it really is an affordability issue in terms of patients who are in a position to be able to pay will have it through that means.

We do have some patient assistance for other patients, but it's very tough to predict at this stage what the actual use.

We've been pleased with the uptake in renal cell cancer thus far, and we're already beginning to see some use probably in liver cancer in China as well.

When do you think that you'll have a better understanding of the potential from Asia?

When we get some more experience there, I'd say, probably.

Okay, thank you.

And we think it's a market that's -- again, I think the other thing that's general the case for liver cancer is it's a disease that's incubating as a result of prior infection.

So it's a disease that's going to grow.

And if you look at just the Chinese market, clearly there's a growing middle class there.

So we think that represents another element of growth.

Okay.

Great.

Thank you very much.

Thank you.

Your next question comes from Brian Rye from Janney Montgomery.

Please state your question.

Good afternoon, and thanks for taking my question, Hollings.

Most of mine have been addressed.

I guess just one housekeeping item at this point.

I noticed that there was a little dent made in the I guess $40 million in milestone-based loans that you will owe Bayer, and I presume that's because the JV tipped over into profitability this quarter.

But could you just generally remind us for modeling purposes of the repayment schedule from this point forward?

This is Greg.

The collaboration agreement provides for Onyx to repay Bayer from a portion of our profit under the collaboration.

So the percentage is 40%.

There's a prescribed methodology that we use.

So to the extent that the collaboration is profitable -- and we include our non-shared expenses, such as our sales force, in that calculation -- then we would be remitting 40% back to Bayer.

40% of our share, and it's not a P&L item.

It's strictly a balance sheet item reclassification.

Got you.

And is there --are there any annual caps on that?

There are no caps.

It's only capped by the 40% that Greg mentioned of our share of the 50% profits.

Okay, sounds good.

And congratulations on the quarter.

Thanks a lot, Brian.

Your next question comes from Gene Mack from HSBC Securities.

Please go ahead.

Hi, Hollings.

Thanks for taking the question.

A couple of follow-ups first.

I guess it's fair to say that sales, based on your earlier comments, sales in renal cell have been --- have stayed fairly -- haven't significantly increased, and I'm just wondering what your thoughts are around earlier data showing that high dose, some patients can tolerate the high dose administration of Nexavar in renal cell, where that might go?

Are you thinking about pursuing that further?

Yes, we definitely are.

Maybe Hank wants to talk about how we're -- we had data, encouraging data from one single site that we are following up on.

Hank, you want to talk about the plans?

Yes, so following on the very exciting presentation of those data, we've initiated a number of different activities.

One would be to systematically and independently review the findings from that study to lead to publication of the data.

Obviously, that's one of the key accomplishments to reach going forward.

Also, we want to understand the disposition of the drug and whether the pharmacokinetics are linear with increasing dose.

And so we've initiated that activity.

We've also initiated expanding that trial to additional sites to corroborate the findings from that single site study.

And finally, we've initiated a randomized trial comparing conventional to higher dose -- higher dose Nexavar.

We've heard anecdotally that a number of clinicians are starting to get experience using higher dose of Nexavar.

I'd say it's at the anecdotal level.

It's a little bit encouraging, but it's also very early.

This is one of the most important and exciting findings in the kidney cancer franchise.

And if we were able to demonstrate on a consistent basis that higher dose of Nexavar is both tolerated, but more importantly leads to meaningful improvements in patient outcomes, such as either complete responses or substantially prolonged progression-free survival, that would be very important for the kidney cancer business.

So this is one of the most important initiatives to date we have underway in the clinical area.

And it accompanies other data that we are collecting on the use of multi-kinase inhibitors in sequence or in combinations with other targeted therapies.

So we have a fairly rich and robust investment in the kidney cancer space.

I think that's a reflection of clinicians' sustained interest in Nexavar as a vital cog in the wheel of the management of kidney cancer.

Okay, but I guess it's safe to say we're still kind of early days, that it'll be a while before we see the next milepost?

Yes.

Okay.

And then one other question on the profitability.

Are you folks any closer to being able to tell us when or if this would be sustainable?

As Greg said, I think he used the word "tips" into profitability in the third quarter.

We're not yet committing to that.

Looking ahead to the fourth quarter, clearly we're looking for sales -- ongoing sales growth.

But also we do see higher levels of expenses in the quarter, not only for ramping up some of these clinical trials but, importantly, for the launch of Nexavar not only in the EU but getting ready to launch in other territories as well.

So those are happening.

And then traditionally, as you probably know if you've looked at our statements historically, the last quarter of the year tends to be a higher expense quarter just from a seasonal standpoint.

So we're not ready to commit.

We will obviously be talking with you guys again in February, and we'll revisit this issue of the outlook for profitability.

Obviously it's going to depend on timing of the ramp in ACC, how quickly these development expenses are going to ramp next year.

We haven't obviously given specific guidance, but there are going to be some higher levels there, importantly, because we're adding some HCC studies to this mix of things as well.

And then, ultimately, if we were to take on another compound for licensing, that could affect things as well.

Okay.

Great.

Thanks, and congratulations on your retirement.

Thanks, Gene.

Not true retirement, just changing my role.

Thanks.

Your next question comes from Jim Birchenough from Lehman Brothers.

Please go ahead.

Hey, Jim.

Hey, Hollings.

How are you?

Good.

So just a question in terms of expected use for Nexavar in liver cancer and focusing on patients that I don't think were studied, patients with Child-Pugh C classification, do those patients tend to die of their cirrhosis or of their progression of cancer?

And if it's progression of cancer, do you expect that these patients will be treated with Nexavar?

The Child-Pugh C, we haven't -- we don't have much experience, and they are the patients that are in the toughest shape.

So we don't have a lot of experience that would indicate that we would confidently project use in that space, in patients with that disease, because they are pretty sick.

But if you look at the entire space, only -- maybe that's 20% of the patients, something of that order of magnitude.

There's only another 10% of the patients that ultimately achieve a cure from curative intent.

So the rest of the patients we see being eligible, and we obviously hope to generate some data in the adjuvant setting, which could extend the time that patients stay on the drug.

And just a follow-up.

I may have missed it in your prepared remarks, but did you provide any refinement of timelines for data from the non-small cell lung cancer trial?

No, we just talked about it being in the second half of '08 previously.

So didn't change that.

Okay.

Great.

Thanks for taking the questions.

Thank you.

Your next question comes from Howard Liang from Leerink Swann.

Please state your question.

Thanks.

In the U.S., can you say whether RCC sales are stable, or was there any decline?

We haven't really changed anything in terms of guidance from essentially stable.

Obviously it's a competitive space.

There's probably a little bit more pressure in the U.S.

than there is ex-U.S.

But if you remember, more of the business now today in renal cell is ex-U.S.

where oral drugs are preferred.

So, in terms of looking at this geography, I think again it's probably -- ought to be thinking globally about this.

Okay.

And just use in the quarter for HCC, I think we hear fair amount of use.

I think there's actually fair amount of reimbursement.

I guess just sort of how much of a penetration is there in HCC, and are we really, really early, very, very limited use or is there a fair amount of use in HCC, both in the U.S.

and Europe?

There is tremendous interest in using Nexavar, both from the clinical study side as well as with the prescribing physicians.

You only have to look at the ASCO presentation [of seeing more than] (inaudible) to see that.

We, as you know, only promote Nexavar for its FDA approved use, which is RCC.

Following the plenary session and following the data submissions, you saw more and more use in third quarter.

And I guess we would be most comfortable saying the growth was driven by HCC in the third quarter.

Okay, that's helpful.

Can we just go over the big five in Europe in terms of how soon reimbursement could be obtained for HCC?

You mentioned Germany is right away.

What about the other four countries timing-wise?

I think probably Germany and France are the quickest, and UK is the latest.

As everybody knows, Italy and Spain take a little bit more discussions with authorities to gain reimbursement.

Are we talking about similar timeframe as with RCC or is it because it's already on the market, it's more quickly?

I don't think we put a timeline on it.

But I think the bottom line it means that some of that approvals won't occur until into the first quarter of next year.

Like for UK, so it's the last one will be -- ?

No, sorry, I don't want to commit to anything for nice.

But for Italy and Spain, it's going to be approvals probably -- reimbursement authorizations coming in the first quarter of 2008.

Okay.

Great.

And then in China, since it's not reimbursed, do they really need approval for patients or doctors to use it?

That's a bit -- it is on -- obviously it's approved for renal cell cancer.

And since it's not approved, it can be used if physicians and patients feel it's appropriate.

Okay.

And last question regarding your strategy of building a pipeline, can you just talk about your strategy and priorities?

Nexavar remains our top priority.

And as you know, we think about Nexavar as a pipeline in and of itself.

So we have been and continue to actively assess oncology opportunities in particular, and we'll continue to do that.

Our focus remains, however, on Nexavar.

Right.

Thank you.

The last question comes from Phil Nadeau from Cowen.

Please state your question.

Good afternoon.

Thanks for taking my question.

First, in your prepared remarks you mentioned that there were 60,000 deaths from liver cancer in Europe, and I think that's somewhat higher than this figure you quoted back in February or March, when you announced the data.

I think around that time you were saying about 35,000 deaths.

So why the difference and how many of those 60,000 deaths are actually in the big five countries?

Phil, actually the number for all of Europe is about 60,000, and obviously, it varies a little bit depending what statistics you pull from.

But the big five is approximately 30,000 deaths annually.

Okay.

And then second is on the agreement with Bayer.

This is the first quarter, I believe, where Nexavar itself was profitable.

Does that change anything about your agreement with Bayer?

And I guess what I'm particularly asking about is there's some speculation in the market that that may affect the terms should Onyx be bought by an independent company.

Is that, in fact, true?

Nothing changes in the agreement other than -- we're just paying back the debt that we had previously received from them.

So nothing changes under the agreement and we continue to be focused with Bayer on driving the value of Nexavar and making it available to as many patients as we possibly can.

So nothing changes.

Okay, good.

And then third question's on Onyx corporate SG&A expense rate.

You noted in your prepared remarks that tipped down a little bit in the fourth quarter but didn't really say what's going to happen in the future.

How much more do you need to add to your infrastructure?

We haven't given any guidance on our G&A line item.

It's been relatively stable.

One thing to note is in that line is also our Nexavar direct expenses, our marketing expenses that we pay directly to support the product, so that can show some fluctuation from period to period.

What we saw from Q2 to Q3 was a slight decline in those marketing expenses.

A lot of that had to do with the activity around ASCO, which took place in the second quarter.

I'd say also that given those comments, we're not really changing the size of the organization.

But as we're looking to launch in the U.S., there are going to be some additional expenses.

We've obviously had some pre-launch expenses, but we're getting ready for launch as well.

Okay.

Great.

And then last question is on Asia.

I think we're all struggling with exactly how big of a market that can be for a branded oncology product.

Do you have any data on other branded oncology products and how much they sell in the Asian markets?

We've looked at various sources for that as a guideline, and I don't have that at the tip of my fingers.

So I'd be reluctant.

But why don't you give us a call back, and we'll see if we can't dig that up?

Okay.

Great.

Thank you.

Thanks.

Okay, well, thank you, every body, again.

We have obviously had a very great quarter here with $105 million in sales and now seeing liver cancer beginning to drive our financial performance.

We're very pleased obviously with the European Union approval in liver cancer, continuing to press forward with the applications in the U.S.

and elsewhere, including China and Japan.

Obviously we've expanded our trials in breast cancer and initiating a lot of other trials.

We've got a proven drug with significant upside.

So we're obviously very excited about where we stand and look forward to updating you on the next call come February.

Thank you very much.

Thank you.

This concludes the third quarter financial results conference call.

Thank you for participating.

You may all disconnect.

Have a great day.