美國安進 (AMGN) 2007 Q4 法說會逐字稿

Good morning ladies and gentlemen, and welcome to Onyx' conference call.

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

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

Please note that this conference is being recorded.

I will now turn the call over to Onyx Pharmaceuticals.

You may begin.

Thank you.

Good morning.

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

We thank you for joining us today to discuss the ESCAPE Phase III lung cancer trial, and our fourth quarter and year-end financial results.

Joining me on our call today are 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 facts are forward-looking.

Reference to what we expect believe, intend to do, plan, estimate, or other statements referring to future events or results, are intended to identify these statements as forward-looking.

Forward-looking statements are subject to risks and uncertainties.

For a discussion of these risks and uncertainties, we refer you to our most recent 10-K, and to our most recent filings with the SEC.

In addition our 10-K for 2007 is expected to be on file by month end.

I would now like to turn the call over to Hollings Renton, who will make a few introductory comments, before turning the call to Hank Fuchs to review yesterday's lung cancer announcement.

After Hank has finished, the management team will provide a brief business overview, including the results for the fourth quarter and for the full year.

Thank you Julie.

Obviously we are disappointed by the lung cancer results, as we had hoped that this trial would provide an important option, for treating a disease that remains devastating despite recent treatment advances.

Before turning the call over to Hank, who will review the study, I would like to acknowledge and thank the patients and physician investigators for their support and participation in this trial.

These results don't change our long term outlook for our confidence that Nexavar can become a standard of care across multiple tumor types.

We believe that Nexavar's unique features and proven efficacy continue to make it one of the most promising new oncology agents, and we have a number of randomized studies under way or planned in different tumor types to demonstrate this.

We have made great strides toward further establishing Nexavar as the cornerstone of cancer care, with approvals in kidney cancer and liver cancer, we have a growing business in two indications, and we have multiple avenues for future growth.

Now I will turn the call over to Hank.

Thank you Hollings.

As we announced yesterday, one of our pivotal Phase III lung cancer trial, known as ESCAPE, was stopped early.

The ESCAPE trial enrolled over 900 patients with all types of non-small cell lung cancer.

These previously untreated patients received Nexavar or a placebo in combination with the chemotherapeutic agents carboplatin and paclitaxel.

The primary end point was overall survival, and the trial was conducted at more than 140 clinical sites internationally.

After completing the planned interim analysis, the independent Data Monitoring Committee, or DMC, recommended that the study be stopped based on their conclusions that the trial would not meet it's primarily end point of overall survival.

The safety observations were generally consistent with those from prior clinical trials of Nexavar, however higher mortality was observed in the subset of patients with squamous cell carcinoma of the lungs treated with Nexavar plus carboplatin and paclitaxel, versus those treated with the chemotherapy [doublet] alone.

We and Bayer have accepted the Committee's advice, and have been providing information regarding this Data Monitoring Committee recommendation to help authorities, and clinical investigators involved in the studies of Nexavar.

In addition, the companies will further review the findings of this analysis and the DMC recommendation, to determine what impact they have on other ongoing mix of our lung cancer trials, including considerations of patient eligibility, end point, and sample size.

Data from the study will be presented at an upcoming scientific meeting.

As it is impossible to predict in advance in which patient groups any drug will be active, we believe that it is extremely important to have a broad development program, within and across different tumor types, both alone and in combination with a variety of anti-cancer therapies, as a way to mitigate the risk of trial failure, and maximize the opportunity to help patients with cancer.

Now I would like to turn the call over to Laura, who will highlight our commercial progress with Nexavar.

Thank you Hank.

With approvals in two indications, we have a strong and growing business.

We ended 2007 with excellent top line performance and positive momentum, having achieved $372 million in annual worldwide sale of Nexavar.

This represents a 125% increase over annual sales in 2006.

In the fourth quarter, Nexavar global net sales reached $125 million, representing an increase of 96% over the same quarter in 2006, and 19% over the third quarter of 2007.

Fourth quarter sales included approximately $43 million generated in the United States, and approximately $82 million from outside the U.S.

With the growth driven by the uptake in liver cancer.

For the full year $142 million was generated in the U.S., while $230 million was derived from outside the United States.

Nexavar is now approved in more than 30 countries for liver cancer, and numerous applications are pending worldwide.

Liver cancer is the 6th most common tumor worldwide, and a third-leading cancer killer globally.

As the first and only approved systemic agent in U.S.

and Europe, and with broad labels in both regions, Nexavar has the potential to help thousands of people suffering from this disease.

At the same time, we realized that with any new market there is an important learning process under way, both for us and for the treating physicians.

As Pioneers in the systemic treatment of liver cancer, we are leading the way in setting a new standard of care , and shifting the treatment paradigm for this awful disease.

In the process we uncovering important information about the care patterns of specialists, and the underlying markets [in Amex], for what is essentially a new therapeutic area, including the size of the total patient population, the rate of of adoption, and the duration of therapy.

That patient's typically have underlying liver disease in addition to their liver cancer, and are often treated by a variety of medical specialists, adds to the complexity of this important therapeutic area.

The variety of screening and diagnosis patterns in different regions of the world, and the prevalence of the disease outside of the U.S.

are a key focus for our collaboration with Bayer.

As we launch this new indication for Nexavar with Bayer, we are getting critical market exposure and experience, and are devising market-based programs to educate physicians, and to maximize the benefits to liver cancer patients.

In the EU, Bayer is proceeding with country by country launches, following approval for liver cancer in the fourth quarter of 2007.

In addition, Bayer has filed for the liver cancer indication in a number of regions including Asia.

In Japan, the Nexavar filing for the treatment of liver cancer was granted priority review study just last month by the regulatory authorities.

In China, where Bayer filed in mid-2007, we anticipate initial adoption to be primarily in the coastal urban areas, where there is greater affordability of health care.

Given the proven efficacy of Nexavar in the treatment of liver cancer, as demonstrated in multiple clinical trials, we intend to support additional trials with the potential to benefit patients at all stages of their disease.

We are planning large randomized trials evaluating Nexavar's use following surgery, to assess whether Nexavar can delay reoccurrence in the disease in the adjuvant setting, and in combination with transarterial chemoembolization, or TACE, as well as in combination with other agents.

Turning to renal cell cancer, Nexavar has been established as an important option for physicians and patients.

We see the global kidney market stabilizing after the introduction and rapid uptake of new target therapies.

Patients are benefiting from multiple options, as many of them are being treated sequentially with different agents.

In this increasingly competitive marketplace, we anticipate some sales pressure, moreso in the U.S.

We believe that Nexavar will continue to play an important role in providing therapeutic benefit to kidney cancer patients worldwide, and are continuing to support multiple ongoing trials, as a way to potentially expand the use of Nexavar in this market.

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

Thank you Laura.

Building on our success in two very difficult tumors, Nexavar is currently the subject of approximately 200 clinical studies, with the goal of amassing comprehensive data, that we believe will ultimately lead to better treatment options for cancer patients.

We have approximately two dozen key randomized trials ongoing or in final planning in several different tumor types, that meaningfully extend our development program, including a comprehensive series of trials in both lung and breast cancers.

The Nexavar clinical development program consists of trials led by Bayer and Onyx, international study groups, government agencies, or outside investigators.

Nexavar is being studied as both a monotherapy, and in combination with anti-cancer agents in a variety of settings.

Ongoing trials in lung cancer include a Phase III and a Phase II study, the Phase III non-small cell lung cancer trial under way in Europe is adding Nexavar to gemcitabine and cisplatin, a chemotherapy doublet most commonly used there.

The randomized Phase II study under the sponsorship of the Eastern Cooperative Oncology Group, or ECOG, has completed enrollment of refractory patients.

This trial evaluating Nexavar as a monotherapy, is using a randomized discontinuation design.

We anticipate results from this study mid-year.

ECOG is also sponsoring a Phase III trial enrolling chemo naive advanced melanoma patients.

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

We anticipate enrollment in this study will be completed in the next quarter.

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

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

Each trial will enroll over 200 , and the primary endpoint of the program, across the program for each study is progression free survival.

Our goal with this clinical development program is to screen combinations with effective therapies, and to better inform the Phase III protocol development process.

In summary, with demonstrated efficacy in two previously underserved cancers, and a broad clinical program designed to leverage Nexavar's unique features, we believe that Nexavar is well-positioned to continue to make significant advances in the treatment of cancer.

We have a solid long term program to deliver many opportunities for success.

In addition to investing further in tumors, where Nexavar's efficacy has already been demonstrated, we have multiple randomized Phase II trials under way.

There are also a number of other earlier signal generating trials ongoing, that will further inform and extend our development program.

Now I will turn the call over to Greg

Thank you Hank.

Net worldwide sales of Nexavar increased 96% to $124.9 million for the fourth quarter of 2007, as compared to sales of $63.7 million in the fourth quarter of 2006.

For the full year, Nexavar net sales were up 125% to $371.7 million, as compared to $165 million in 2006.

Sequentially we also experienced strong sales growth, with an increase of $20.3 million, or 19%, over the third quarter.

As a reminder, Onyx and Bayer share profits worldwide except in Japan, where we will earn a high single-digit royalty on any sales.

For the fourth quarter, our net loss was $11.7 million, or $0.21 per share.

This included employee stock-based compensation of $3.9 million, or $0.07 per share.

For the full year of 2007, Onyx' net loss was $34.2 million, or $0.67 per share.

Shared Nexavar sales and marketing expense by Bayer and Onyx, including cost of goods sold and distribution expense was $82 million for the fourth quarter in 2007.

This is an increase over the prior quarter, as Nexavar's use continued to grow throughout the world, and as Bayer and Onyx expanded Nexavar launch activities for liver cancer in the EU and in the U.S., and prepared to launch elsewhere.

Shared R&D expense by Bayer and Onyx was $51.7 million for the fourth quarter of 2007.

This expense was higher than that incurred in the previous quarter, due in large part to increased clinical trial activity, and preparation of regulatory submissions for liver cancer.

Onyx, direct R&D expense of $5.5 million in the fourth quarter of 2007 is primary Nexavar-related expenses incurred directly by Onyx.

Onyx' SG&A expense was $16.4 million in the fourth quarter of 2007.

Onyx' SG&A expense includes the cost of our U.S.

salesforce, the portion of shared Nexavar's marketing expenses that we incur directly, the cost that we incurred for general and administrative support of the company, and SG&A related non-cash stock-based compensation expense.

At December 31st, 2007 we had cash, cash equivalents, and marketable securities of $469.7 million, as compared with $271.4 million at December 31st, 2006, and $451.2 million at the end of last quarter.

In 2008, we anticipate Nexavar's primary topline growth driver to be revenue from the liver cancer indication, and given the worldwide distribution of this disease, that an increasingly larger percentage of Nexavar's sales will be generated outside of the U.S.

Because of the dynamic market conditions, we are not providing 2008 revenue guidance at this time.

We are committed to fully unlocking the market potential in liver cancer to focus market development effort and investing in the clinical potential of Nexavar.

As a result, our shared commercial expenses in R&D, we expect annualized spending levels to be similar to those we reported in the fourth quarter of 2007, and we expect the spend may be uneven across quarters, as clinical trials, commercialization, and launch activities vary throughout the year.

We expect Onyx' SG&A expenses, excluding stock-based compensation to be higher on an annualized basis, than what we report in the fourth quarter, as we increase our field-based commercial support activities for Nexavar.

As a result, while we may be cash flow positive for the year, we are not yet comfortable projecting profitability in 2008, and we may have profitable quarters, due to the variability of expenses.

Now I will turn the call over to Hollings.

Thanks Greg.

While we are disappointed by the outcome of the Phase III lung cancer trial, these results don't change our long term outlook, or our confidence that Nexavar can become a standard of care across multiple tumor types.

We are pleased with the outstanding commercial results for Nexavar in 2007, and look forward to the continued growth of the Nexavar franchise, which we anticipate will be driven by sales for the treatment of liver cancer patients, both in the near term with the current label, and beyond as we generate data in combination with surgery, local procedures, or other systemic therapies.

With a proven drug, a successful collaboration with Bayer, outstanding commercial teams launching Nexavar in a second indication, and a comprehensive joint development program, we continue to be energized by the promise of Nexavar, both now and in the future.

We will now take your questions.

Thank you.

We will now begin the question-and-answer session.

(OPERATOR INSTRUCTIONS) The first question comes from Steven Harr from Morgan Stanley.

Please go ahead.

A couple of questions.

First off, on the safety side in the squamous cell population from the failed trial, can you give us an idea or especially patients I am sure want to know, what the safety signal is that you think led to the adverse outcome?

Hi Steve.

Good morning.

First of all, there was a meaningful increase in mortality with squamous cell carcinoma, and as you know, we had an independent Data Monitoring Committee monitoring the study because of the potential concern for fatal pulmonary hemorrhage, associated with another anti-angiogenic drug.

However we found in this study that this increase in mortality was not associated with the reported excess of fatal bleeding events.

I have to say that as you know we just got this data, we are currently in the process of reviewing, trying to understand these findings better.

Okay.

That is helpful.

And if we move on to the operating expense, that people just try to figure out, or are confused.

Can you give us an idea where you expect this to go over time?

You have a failed study now in ENHANCE.

Is this something where over time we should expect R&D to moderate, do you expect it to increase?

And then SG&A once we get passed the hepatocellular launch, do you think you will begin to see incremental sales fall in the bottom line, and see margin expansion, or are you going to end up continuing to invest, and then we should take the margins you have now and stabilize them over time?

Maybe we should talk a little bit about the risk/return of the investments that we are making to capitalize on Nexavar.

The first is obviously investing commercially to launch the drug.

We have got a first mover advantage, we want to capitalize on that first mover advantage, and there are going to be at least higher expense commercially, are to see to a successful launch, and Laura highlighted some of the issues around reaching additional audiences, to gain penetration with the current label, as well as secondarily, the next series of investments for us is in the clinical development in liver cancer, which we think is relatively low risk, given that we are three for three in large clinical trials in liver cancer, and we think we can extend the benefit to a lot of patients with the disease at earlier stages, both that are getting surgery and local procedures, or maybe even later, to enhance the activity of Nexavar in combination with other agents.

So we think that is an investment that makes a lot of sense.

On the development side of things beyond liver cancer, as you know, we have increasingly moved our development program into randomized Phase IIs, as probably best exemplified by the breast cancer program, but we are doing it in lung cancer in other settings, as well as other diseases.

So I think that at this stage, we certainly are looking at how much to put over time, because we do see a need to improve the margins commercially, as we get the launch behind us, as we see growing sales in ACC, more cash dropping from the commercial activities to fund the development, and although the development knowledge will be higher as we have guided here in this next year, I think beyond that it is going to depend on results out of the Phase II studies.

All right.

Thank you.

The next question comes from Katherine Kim from Banc of America Securities.

Please go ahead.

Hi.

Thank you for taking my questions.

The first question I have is on the European trial, do you expect to amend the trial to restrict to the non-squamous considering the results of the U.S.

Trial?

Hi.

That is Hank.

As I indicated we just got this data over the weekend.

We will be sharing the data with the Data Monitoring Committee and central investigators of the trial, and discussing with them what if any amendments to make in the ongoing program, with a wide variety considerations, including but not limited to patient population.

So stay tuned.

Can you just tell us in terms of recruitment where you are at with the European trial?

Yes.

We don't give specific updates on enrollment on ongoing clinical trials.

Okay.

And then can you provide a status of the Japan launch in renal, do they know that you have gotten the approval, but when do you expect pricing approval, and then also if you can talk about the hepatocellular approval?

Hi Katherine, this is Laura.

In Japan as you pointed out, we have just received approval for RCC, and have also been notified, or Bayer has been notified that Nexavar has priority review for [A2C].

So we expect RCC pricing and revenue to begin to come in throughout this year, and A2C we have seen about a year and a half, somewhere in the current 12 months period, I think we will begin to see A2C movement.

Okay.

And then a final question on expense side.

So when you talked about the annualization of being similar to the run rate of the fourth quarter, are you referring to the Nexavar-related expenses, or are you also referring to your own R&D and SG&A expenses?

Katherine just to reiterate, the guidance was on the shared R&D and SG&A expenses, which can be found on the supplemental table on the press release, and then we also guided to our own SG&A expenses being higher than the fourth quarter.

And then in terms of profitability, are you giving the JV profitability, or your own profitability?

What we talked about is being cash flow neutral.

Right.

That is our expectation, and not yet at a place to be able to project the profitability for the company.

Okay.

Thank you.

Your next question comes from Howard Liang from Leerink Swann Company.

Please go ahead.

Thanks very much.

Was there an option to only discontinue to squamous cell portion of the trial?

Good morning, Howard.

At this point, we do not believe that the data supported further pursuit of development for registration of Nexavar in non-squamous, non-small cell cancer in combination with carboplatin and paclitaxel.

And operationally what does it mean to stop a trial at this point, I would imagine that everybody is off Nexavar triple combination by now, and I guess are there still many patients on Nexavar monotherapy at this point?

And at what point will data will not be collected after you stop the trial?

I think in general, Howard most of the patients have discontinued the study, due to either progressive disease, or other events, and we will be working very closely with the physician investigators to convey these results.

At this point, I don't think that additional data will really change the conclusion in an important way.

Okay.

And can you say what percentage of the ESCAPE trial population was squamous versus non-squamous?

We said in the past that the accrual of the squamous population in this study was generally represented by squamous cell carcinoma in general somewhere we have referred to around 25 or so percent of patients that have non-small cell lung cancer have squamous cell cancer.

I want to point out that the data will be presented at an upcoming scientific meeting.

We are a little reluctant to disclose a lot of the details of the study, but rather encourage folks to participate in the scientific sessions.

Okay.

Great.

Thank you very much.

Your next question comes from [Jessica Li] from Goldman Sachs.

Please go ahead.

Thank you for taking the question.

For one, you may not want to disclose this now, but I would still like to answer, to ask the question.

Is there any positive survival claims for Nexavar in non-squamous cell populations, or do you have the subset analysis?

Again I think going back to Hank's answer that data will be presented at the upcoming scientific meeting.

Do you think the 400 milligram BID dosing is the optimal dosing, for lung cancer, as well as breast cancer, given what you have seen in the ESCAPE trial?

As you know, Jessica we have some very exciting data in kidney cancer.

The dose finding timeframe of Nexavar began in the year 2000-2001.

We identified a skin reaction of the [dosing] toxicity.

But that was in advanced cancer patients and without the benefit of knowing how the effective the drug was going to be, and so we were very intrigued and encouraged last year, when an investigator at an institution reported that he could administer twice a high a dose, without actually increasing patient toxicity, and that investigator in kidney cancer reported that the majority of patients could achieve a remission, and in some cases complete remission of their kidney cancer, which was an extraordinarily exciting finding.

We are busy pursuing documenting those findings, and extending those findings in other clinical sites, as well as in randomized trials.

So I would say stay tuned for the possibility that we might find different strategies to optimize the effectiveness of Nexavar in cancer.

Great.

Thank you.

Jessica, just in combinations with chemotherapy, we have to establish a safe dose in combination with the chemotherapy, so that these trials for example, this one had a preceding Phase I trial, where we established 400 milligrams as the safe dose to be used with the regimen of carbo/pac.

Right.

Thank you.

The next question comes from Richard Smith from JPMorgan.

Please go ahead.

Good morning.

Could you just give us a little bit more information about the rollout of Nexavar in Europe, and other countries that it is available and how it might being used at the moment?

Hi Richard.

It is Laura.

In the EU we received approval in the fourth quarter, and depending upon the country we have pricing approval and launches, which will occur basically throughout the first half of 2008.

We did have some early uptake in Germany and France, and in particular in Germany where pricing approval is not necessary separately.

In the top EU countries we have had some uptake in Q4.

The growth was driven by that.

I would say that Germany is the most penetrated, and that the non Top 5 EU are the least penetrated.

And countries like the U.K., Spain, Italy, are they anticipating approvals, or uptake in the first half?

I am going to say yes to that with the exception of the U.K.

Okay.

Thank you.

The next question comes from Jason Zhang from BMO Capital Markets.

Please go ahead.

Thanks for taking my questions.

A question for Hank.

I know one of the major reservations we had about ESCAPE, was that there was a randomized Phase II study, and I guess the company used [Avastin] to result in lung as approved, that could work in combination with chemo, and that proved not to be the case for Nexavar.

So my question is for the Nexavar trial, do you have interim analysis, and number two is, so far Nexavar has been shown to work only as a monotherapy.

It has not worked out at all in combination with chemo for multiple types of tumor now.

What decision do you have to make going forward, particularly given your R&D expense seems to go higher every year, at what point do you think the investment scale tips toward unfavorable, if you keep investing in the combination where there is really no scientific reason to believe that it will work?

Okay.

Jason thanks for your questions.

So let me see if I can get them, and then please follow up.

So first of all, we do have Data Monitoring Committee's overseeing our Phase III clinical trials where survival is the primary endpoint, and certainly the NExUS trial of Nexavar in combination with gemcitabine/cisplatin is one of those.

We are very encouraged to dive into a Phase III clinical trial in lung cancer, we believe that the need for new therapies to improve patient's outcomes is the efficacy of other anti-angiogenic drugs, the competitive environment, and the preliminary data that we had was sufficient to a large population, and unfortunately that didn't work and we need to assess the impact of that program.

At the same time, I don't believe that our drug is going to be an entirely monotherapy drug.

Certainly most of the most mature programs that we have data on are in monotherapy settings, given the devastating need of patients in those settings, liver cancer and hepatocellular carcinoma, but we do have efficacy beyond those very tough tumors in combinations with dacarbazine, in combinations with doxorubicin, and melanoma and liver cancer specifically, and we are encouraged by that.

So we have undertaken a broad program to invest.

We certainly know that we had our balance portfolio investment of Phase III and Phase II, and what you see happening in the Nexavar investigation program is that we are increasing our commitment to the Phase II signal generating activity, as a means to point the way for Nexavar in a very strategic and informed manner.

So hopefully I have covered your questions.

Thanks, that was very helpful.

I have a financial question I know you are a little reluctant to break out revenue from renal and liver.

You said the liver cancer is really just the start.

I wanted to probe a little more for the U.S.

liver cancer market.

The data came out last, as most physicians probably know very well of the data, and can you give us any sense in the U.S.

at least, where do you think the liver cancer market is, how much room there is for growth, and whether it will follow the pattern of renal sales, that means a very fast uptake, and a pretty fast way towards maturation.

You are certainly right that the ASCO presentation for HCC was met with great enthusiasm in the medical community, in particular in the U.S., we saw some quick uptake which was very encouraging for these patients, so as we look for how penetrated are we today in the U.S.

market, and what is that opportunity, it is early days for us to be able to characterize that well.

It is a new market.

We have a leadership position in it we are developing that market.

So I think that the conclusion of it is that we have good interest in the drug.

We have good usage, and we have great opportunity to continue to expand that market.

So I think one thing to add to what Laura has said is that unlike RCC, we actually have two physician groups to educate to0.

So it is not the same just educate the oncologists, but we have G hepatologists as well as some GI oncologists, so that might modulate the rate of uptake in the U.S.

Just based on the current label that we have.

The other thing that might be a little different is the geography issue here with this disease, in that HCC is much more prevalent outside of the U.S.

And because of that the rate, there are also the same issues about multiple physician audiences, but also importance for follow-on pricing approvals, and I would say that maybe Europe may not be that much different from, in terms of pricing approval follow-up, but the timing to get the drug in selected Asian markets, where it is very important, is probably going to lag a little bit.

So that is probably going to be another driver that is out there a little ways.

Thanks.

The next question comes from Jim Birchenough from Lehman Brothers.

Please go ahead.

Hi guys.

Number one I am wondering Hank, whether you know whether the excess mortality seen in the non-small cell lung cancer trial, was driven by taxane-related toxicity, Nexavar-related toxicity, or progressive disease, and in asking that question I am assuming that you have got reports on grade 5 toxicities that would be drug related?

Yes.

Jim, obviously the first area of focus was on the potential for the to be toxicity as a result of fatal pulmonary hemorrhage, which is I have said before does not appear to be the case, as to the precise nature of the toxicity that resulted in increased mortality, we have not really uncovered a primarily finding just yet.

We are going to be reviewing those data with experts, to try to better understand that, but at this point what we can say is that it did not appear to be the direct result of excess fatal pulmonary hemorrhage.

Were you tracking those rates by toxicity along the course of the trial, and was there any balanced in there?

Sure.

There was an independent Data Monitoring Committee who oversaw the faith in ethical conduct of the clinical trial, they kept a very close eye on the clinical trial, and we first became aware of these results, when they indicated that the trial would not meet its primary endpoint, and now we are sharing this news with you, as fairly, as quickly as we got it.

And then just turning to the indications ENHANCE, do you have a sense in renal cell cancer what percent of patients require a dose reduction, and whether there is any greater percentage where we are seeing a dose reduction in liver cancer?

Hi, this is Laura.

In renal cell cancer the physicians have had an opportunity to have a lot of experience with the drug, and as we look at variability in patient treatments, we haven't seen anything that is I think driving particular changes in dose usage.

As Hollings said, as Hank said, we have actually had some interesting data about dose escalation as well in RCC.

So I think that physicians are quite comfortable with using the drug, and are comfortable with the approved dose.

In A2C it is early days the patients are clearly sicker than RCC patients, in that they have two diseases, but again what we are beginning to see is a great familiarity with the usage of the drug, and Nexavar is well-tolerated.

Great.

Thanks.

Next question.

The next question comes from Jim Reddoch, Friedman, Billings, Ramsey, please go ahead.

Thanks for taking the question and I missed the beginning of the call, so I apologize you may have already touched on this.

So in terms of other Nexavar trials, if I remember correctly you are starting or had started four breast cancer trials, and if I remember they were fairly significant Phase II trials.

Would the spending on these trials be majority in '08, or is that more of an '09 sort of thing, in terms of the majority of the spending for these trials, and secondly which of those have taxane in the background?

Thanks.

Hi Jim.

Thanks for the question.

This is Hank I'll start and if you need additional financial help, if I need additional financial help, I will ask Greg to chime in.

So the trials are fairly large trials, we call them Phase II trials, but I want to point out that 200 patients in over 100 events, they are trials that are roughly comparable to the size of the trials that have resulted in approvals for breast cancer drugs recently.

That said we are calling them Phase II trials, and their purpose to generate signal to inform Phase III decision making.

Two of the trials have taxane backbones in them.

There is a front line trial that is weekly Paclitaxel, plus or minus Nexavar, and there is an additional trial that is [iller's] choice therapy, either the taxane docetaxel, or [letrasal], plus or minus Nexavar, so that would be about 1.5 of those trials.

I do want to add that we started five of these trials at this point, and the trials are just getting under way.

So I think that the expenses will begin in 2008 and continue through 2009.

All of these trials are being conducted in collaboration with renowned experts in the field of breast cancer, and are not the typical company-sponsored clinical trial expenses, and so we are really excited that these trials will generate signals, which will lead to the further development of Nexavar in breast cancer.

I think the other driver of the increased expenses on the development side for 2008, and moving into 2009, are going to be the HCC investments.

We have trials that will be launching as an adjuvant to surgery, in combination with chemoembolization, and in combination with other systemic agents, and the goal there is to add benefit to patients when they are in the earlier stages of their disease, in the adjunct setting, or when they are getting local procedures that they weren't eligible for a period of treatments, and even to see if we can enhance the benefit for patients with Nexavar in other combinations, so we think these are all rational investments, high pay-off, relatively low risk, because we are three for three in liver cancer, and therefore we want to benefit as many patients as we can, and we think it is a very good risk/return proposition.

Okay.

Thank you.

The next question comes from Phil Nadeau from Cowen & Company.

Thanks for taking my questions.

My first question is on your U.S.

sales in the quarter.

There was only a modest growth quarter over quarter.

Why do you think that is?

Because kidney cancer decreased in the quarter, or did liver cancer in the U.S.

plateau?

We saw a rapid uptake in HCC throughout the first few months after the ASCO presentation.

But the U.S.

approval was only received a couple of days before Thanksgiving.

So I think that we have to look at the fourth quarter as one before the U.S.

salesforce had an opportunity to be in the marketplace.

Okay.

That is helpful.

And then second is on duration of therapy.

You mentioned that this is one of the parameters that you are monitoring in the launch, what is the duration you are seeing today in kidney cancer, and what is the duration you are seeing in liver cancer?

It is difficult for us to tell you today where we are in duration of therapy, particularly in liver cancer.

I can tell you in the SHARP trial we saw duration of about five months, and in kidney cancer a bit longer.

In the real world as we experience activity with a variety of patients and physicians, we tend to see lower amounts, or lower duration of therapy and we are seeing some of that.

But again it is very early days in the development of the HCC market.

Okay.

And then last question is just a follow-up on one that was asked before, and that is on dose reductions.

You said that you see HCC that the drug is well tolerated, you didn't really quantify or elaborate on whether you are seeing any dose reductions at all?

Can you talk a little bit about dose reductions, specifically in liver cancer?

Sure.

But I will begin it is still too early to know as the reports that we hear are really anecdotal at this stage, we don't have a lot of data in the marketplace, and so I think that right now we certainly have some patients who are dose reduced, and have an active program to help the physicians in understanding how to manage those patients well, and as Hollings said, we are in the process to really just beginning of educating two medical specialties.

The medical oncologist has a lot of familiarity with Nexavar is he/she is treating a kidney cancer patient, but not if they have not treated one, and secondly, we have GE hepatologist who has not had the opportunity to learn about Nexavar, and so we have active programs in helping them manage through that.

I know I am not giving you a number, I'm telling you that where we are is the early days, and it is mostly anecdotal.

And one final question, if I may.

In the SHARP study if I remember correctly, around 30% of patients were dose reduced.

Have you ever disclosed whether the dose reduced patients had different outcomes different PFS, or survival, versus those patients who received a full dose in the SHARP study?

No We have not reported that.

Okay.

Thank you.

There are no further questions at this time.

I would like the turn the call back to Onyx Pharmaceuticals for closing comments.

Please go ahead.

Well again, we are disappointed by the liver cancer news, but we remain very confident in the drug.

So stay tuned for future presentations at scientific meetings.

Thanks a lot.

Thank you, ladies and gentlemen.

This concludes the Onyx Pharmaceuticals conference call.

Thank you for participating.

You may all disconnect at this time.