美國安進 (AMGN) 2008 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Onyx Pharmaceuticals financial results 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, Inc.

You may begin.

Thank you.

Hello and welcome.

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

We thank you for joining us today for our fourth quarter and year end 2008 financial results conference call.

Leading our call today is, Onyx's President and Chief Executive Officer, Dr.

Tony Coles.

Also providing updates on the teleconference are, Laura Brege, our Chief Operating Officer, and Matt Fust, our recently appointed 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.

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 to you our 10-K for the year ended December 31st, 2008, which we expect to file with the Securities and Exchange Commission this week.

In addition, we will be presenting and discussing nonGAAP financial measures in this presentation.

For a reconciliation of these nonGAAP financial measures to the corresponding GAAP measures please see today's press release which is posted on our website at www.onyx-pharm.com.

I would now like to turn the call over to Tony Coles who will begin the discussion with an overview of our business.

Afterwards Tony's remarks, the Management team will review commercial, clinical and financial highlights before opening up the call for questions and answers.

Tony?

Thanks, Julie.

Before I begin I'd like to welcome Matt Fust as our new Chief Financial Officer.

Matt brings extensive Senior Management and biotech operating experience to Onyx and it is a pleasure to have him as a member of the Executive team and a participant on today's call.

You will be hearing from Matt a bit later after Laura talks about some of our commercial successes and opportunities ahead.

Now let's turn to 2008, a year of remarkable growth and advancement for Onyx.

It was the first full year of Nexavar's expansion into it's second indications of (inaudible), the first year we expanded the pipeline by adding not just one but potentially three new compounds to the Company's portfolio, and very importantly, it was the first full year of positive cash flow and profitability for our business, an accomplishment that was made possible by increasing brand margins for Nexavar.

While any one of these achievements would be a milestone in and of itself, the fact that these signature accomplishments occurred in the same year suggests that our business is transforming in the most important of ways and that we have achieved would few other biotech companies have, product sales driven earnings.

With our financial profile and cash balance we believe we are well positioned to weather the current economic turbulence and we expect additional progress for the business in 2009.

We recognize that Nexavar, with its free cash flow, is the engine for continued growth of our business and we are committed to investing in and wisely growing this important asset.

In 2008, we made significant progress on all four of our Corporate priorities.

These include first and foremost, managing Nexavar as a business.

Where strong Nexavar sales growth of 82% and improved operating margins compare to the prior year drove Onyx to profitability in 2008.

Second, maximizing our commercial business.

Third, investing in the development of Nexavar.

And fourth, building a product portfolio beyond Nexavar.

As Nexavar increases its penetration in liver cancer it is creating a new standard of care across the globe for this very difficult to treat tumor.

At the same time, Nexavar maintained its presence as an important therapy for kidney cancer and together these two markets have established Nexavar as a significant player in the field of targeted therapies.

And yet with all of this successful performance, it remains important for us to think ahead.

Beyond Nexavar, Onyx expanded its portfolio to encompass some promising new targets.

We selected these novel agents based on their unique characteristics as well as their potential commercial opportunity.

With deal structures that allow for staged investments, as risk reduction and value creation occur, we've started to build a portfolio outside of Nexavar in a clear but measured way.

And with our experience in driving development and commercialization efforts while managing cash reserves, we believe we're in an excellent position to grow the value of these assets as they advance into and through the clinic.

Looking ahead, we believe that the tumultuous market conditions continue to favor companies like Onyx with a healthy cash balance, a strong financial profile and a cash generating product.

Mindful of this, we will continue to actively evaluate opportunities and expect to remain as selective in the types of compounds we assess as we are diligent in the kinds of deals we execute.

In summary, Onyx has advanced significantly from its position just 12 months ago.

We have leveraged our successes with Nexavar to invest strategically in the excellent growth potential of the Company.

We have established a robust commercial presence in the liver and kidney cancer markets.

We've created a rich pipeline with Nexavar, and beyond this, we have begun shaping a diversified portfolio through strategic and disciplined corporate development activities.

We're confident in our strong operating and financial position entering 2009 and we expect that our commercial successes, our opportunities for growth and our strong balance sheet, will continue to differentiate us from our peers.

Now I'd like to turn the call over to Laura to provide an overview of our commercial and development activities.

Thank you, Tony.

I would like to begin with a short overview of our sales performance and then briefly discuss our commercial activities in liver and kidney cancer.

I will finish my comments by describing a few of our development highlights.

For the full year of 008, global net sales of Nexavar increased 82% to $678 million of which $197 million were US sales and $481 million were sales from outside the United States.

In the fourth quarter, global net sales of Nexavar were $177 million, a strong performance driven by an increase in underlying demand across all regions, despite a weakening Euro and fluctuating foreign exchange rates.

Of the total sales generated in the fourth quarter, approximately $52 million were US sales, demonstrating strong growth of 8% compared to the prior quarter, an accomplishment we're especially pleased to report.

As we've previously discussed, referral patterns for liver cancer vary across academic and community centers making the treatment paradigm more complex than for other cancer indications.

Since Nexavar is the first therapy of its kind for liver cancer our primary job has been to build and to expand this market.

Identifying new patients and new prescribers wherever possible.

What we've discovered is that relationships between the various physician specialty types that treat liver cancer are critical.

In the United States we deployed market development specialists in the second half of 2008 to call on the various non-oncologist specialties within these multi disciplinary teams that treat liver cancer.

These sales specialists are concentrating our regions in the US with the largest market potential.

And preliminary market intelligence suggests their work is beginning to gain traction, especially within the hepatology community.

As it is still early in the course of their efforts, we expect to see the impact of these activities emerge throughout 2009 and beyond.

In Europe, we continue to expect significant sales growth in the largest countries, notably Spain and Italy, where Nexavar gained reimbursement status during 2008.

In addition, Bayer is expanding it's efforts in the broader European market which is largely untapped, with approximately 25,000 deaths annually, representing 40% of all cases in Europe, European countries outside of the top five are likely to contribute meaningfully to sales growth over the coming year.

In China we've seen increasing uptake of Nexavar since was approved in July.

And with its leading incidence of liver cancer we expect that China will also drive sales growth in 2009.

Turning to other countries in Asia, Nexavar received marketing approval in South Korea in 2008, and reimbursement approval is expected in the first half of this year.

In Taiwan, marketing authorization has been filed and we expect approval should also occur in the first half of this year, with reimbursement potentially to follow less than a year later.

And in Japan, Bayer has filed some marketing approval for liver cancer and expects to receive authorization the first half of this year.

With reimbursement already secured in this key country, the launch approval for liver cancer is expected to drive significant sales growth in the latter half of the year, where Onyx receives a royalty on all sales.

In addition to the progress we're already making, critical success factors for our continued growth in liver cancer include: First, increasing penetration in existing markets and capturing new patients, specifically at the time they're first seen and diagnosed by the different physician types.

Second, driving appropriate utilization of Nexavar earlier in the continuum of patients disease.

Third, extending our leadership by (inaudible) data for Nexavar through the Phase III STORM trial and in conjuncture with local regional procedures such as taste.

And finally, securables and reimbursements in key Asia/Pacific markets to drive continued sales growth.

Turning to kidney cancer, Nexavar continues to play an important role in the treatment of this disease.

It is the only agent with overall survival data in the second line setting.

Development initiatives in kidney cancer are also centered on expanding our clinical data set to further inform and drive utilization.

There are two Phase III studies underway evaluating Nexavar in the adjuvant setting, as well as several Phase II studies evaluating Nexavar in a variety of sequencing and (inaudible).

Now I'd like to speak for a (inaudible) clinical activities in additional tumor types.

With Bayer we have a broad development program underway exploring Nexavar's efficacy in a wide range of settings.

We have two Phase III studies underway, one in non-small cell lung cancer and another in metastatic melanoma.

Our pivotal lung cancer study, NExUS, is evaluating Nexavar in combination with gemcitabine and cisplatin versus the chemotherapy doublet alone.

And we are pleased to announce that this important trial has just completed enrollment with approximately 900 patients.

In metastatic melanoma, the Eastern Cooperative Oncology Group has completed enrollment of the 800 patient trial last year with overall survival as the primary end point.

Dependent upon the rate at which events occur, we could see results from this trial this year.

We also have planned for additional Phase III studies this year including initiating a pivotal trial for Nexavar in thyroid cancer.

Additionally, we're expanding our portfolio of signal generating randomized Phase II studies to evaluate Nexavar in several other common tumors with significant commercial opportunity and unmet medical needs.

In breast cancer two randomized Phase II studies have completed enrollment, one in combination with paclitaxel, and another one with capecitabine.

We could also see top line data from one of the studies this year.

In addition, we've initiated signal generating trial evaluating Nexavar's maintenance therapy for ovarian cancer patients and are planning to initiate a trial in colorectal cancer as well.

In addition to the progress we've made with Nexavar, we've made significant advances in expanding our pipeline.

Our first recently added compound, ONX-0801 is a novel anti-folate inhibitor.

We believe it distinguishes itself from other agents in this proven class of drugs through it's enhanced selectivity for a receptor that's over expressed in certain tumor cells.

We expect that this new first-in-class targeted therapeutic approach could result in improved outcomes for patients.

We've also recently acquired option rights to ONX-0803 and ONX-0805, two JAK2 inhibitors.

The option structure for this deal reflects our portfolio expansion strategy through corporate development transactions that provide staged investments as risk is reduced.

Data from Phase I dose ranging studies evaluating ONX-0803 in patients with primary myelofibrosis could be available sometime this year.

It's a busy and productive time given the significant advances we've made both commercially and clinically.

With Nexavar we are well on our way to building a block buster oncology product and fully expect that by 2010 Nexavar could reach over $1 billion annually in worldwide sales.

Tens of thousands of patients worldwide have already benefited from treatment with Nexavar and we expect that thousands more will again benefit this year.

And with our partner Bayer, we're committed to exploring and maximizing Nexavar's potential against an ever increasing number of cancers.

Now I'd like to turn the call over to Matt Fust.

Thank you, Laura.

As the newest member of the Onyx Executive team, I share Tony's and Laura's enthusiasm that this is an exciting time for Onyx in that the Company is extremely well positioned both for continued Nexavar growth and to capitalize on new opportunities.

The growing positive cash flow from Nexavar is an essential metric for Onyx's continued success especially in this challenging economic environment.

The Company's fundamental financial strength, commercial and clinical accomplishments and its future prospect make Onyx a stand out in our industry.

I'm pleased to start my first earnings conference call by reviewing our strong 2008 financial results.

I will also discuss our expectations for financial performance for 2009 and our guidance for the year.

Given that we have changed the format of our financial tables beginning with this quarter, Julie Wood and I will be available after the call for more detailed questions about these changes and the impact on modeling assumptions.

Worldwide net sales of Nexavar increased 82% in 2008 to approximately $678 million, exceeding the Company's sales guidance.

This revenue growth is up from approximately $372 million in 2007.

GAAP basis net income for 2008 also exceeded Company guidance and was approximately $2 million or $0.03 per share fully diluted compared to a loss of approximately $34 million for 2007.

As Tony mentioned, achieving our first year of profitability is an important milestone for the Company and provides a foundation for continued growth in 2009.

Worldwide net sales of Nexavar in the fourth quarter of 2008 were approximately $177 million, a 41% increase over the fourth quarter 2007.

Although during the fourth quarter of 2008 the US Dollar strengthened against the Euro by approximately 12%.

Sales performance reported for the fourth quarter of 2008 was driven by growth in underlying demand in all regions worldwide.

Shared Nexavar sales and marketing expenses incurred by Onyx and Bayer, including cost of goods sold and distribution expenses, were approximately $299 million for 2008.

This expense line item includes the cost of initiating launch activities for the liver cancer indication in new countries during 2008.

Onyx's research and development expense was approximately $124 million for 2008.

Note that under the new presentation, the R&D expense line on our P&L includes half of all development expenses related to Nexavar, Onyx's non-Nexavar R&D expense and R&D related noncash stock-based compensation expense.

R&D expense for the fourth quarter of 2008 includes approximately $34 million, which was incurred in connection with two transactions, the licensing of rights to ONX-0801 from BTG and acquiring the option to license two compounds from S*BIO.

Onyx's SG&A expense was approximately $81 million for 2008.

This line item includes the cost of our US sales force, the portion of shared Nexavar marketing expenses that we incur directly, the cost that we incur for general and administrative support of the Company and SG&A related noncash stock-based compensation expense.

Finally, at December 31st, 2008, we had approximately $458 million in cash, cash equivalents and marketable securities with cash flow from our operating results contributing to a healthy balance sheet.

Turning to 2009, we expect robust demand to continue to drive worldwide net sales growth of Nexavar.

As a result, we are providing guidance for global net sales of $850 million to $875 million for 2009, reflecting the continued launch progress and reimbursement approvals that we expect in several key markets including in Asia/Pacific.

As we drive the Nexavar business to the next level, we expect continued strong product revenue growth to be another signature accomplishment for the Company.

With Nexavar's growing sales, we expect the Nexavar business will continue to be significantly cash flow positive, and as a result, Onyx to be profitable again in 2009.

We expect to grow earnings per share while continuing to make the investments necessary to grow near term sales and to maximize the potential of our business.

Commercially, we will continue to support ongoing and planned liver cancer launches global and will expand our ongoing outreach to non-oncologists.

We will also continue to further our development efforts both by exploring promising new indications for Nexavar and by advancing our first pipeline compound, ONX-0801.

Given these investments we expect total operating expenses for 2009 to increase approximately 5% over the annualized fourth quarter 2008 level excluding the one-time charges for our corporate development transactions.

Consistent with our practice in prior years, we will not be providing specific dollar EPS guidance for the year.

As we did in 2008, we enter 2009 confident in our ability to deliver meaningful results for patients and for shareholders.

And with that I'll turn the call back over to Tony.

Thanks, Matt.

2008 was a year of major achievements and foundation building and in 2009 we expect to expand upon that success.

Looking to the year ahead, we anticipate continued sales growth from Nexavar driven by continued demand growth, expanding both our geographic reach and penetration in existing markets.

In addition to strong sales performance, as Matt has outlined, and a continuing and sharper focus on operating leverage, we believe there will be opportunities for considerable momentum in the advancement of our pipeline this year.

Specifically, we will be furthering our Phase III development program with a large randomized trial of Nexavar in combination with another targeted therapy in liver cancer to extend our leadership in this space.

We may be in a position to report out data from ECOGs Phase III metastatic melanoma trial.

In addition, we plan to initiate a pivotal Phase III trial in thyroid cancer.

In our Phase II development program, we may have a data readout from one of the large randomized Phase II breast cancer trials.

And we intend to expand upon our existing program with a randomized Phase II trial in colorectal cancer.

Finally, we intend to assess our option exercises for ONX-0803 and ONX-0805 as new data becomes available from the ongoing development of these exciting new compounds.

We've made important progress towards accelerating our vision of building a leading biopharmaceutical Company.

We've positioned Nexavar as the leader in the treatment of liver cancer and as an established therapy for kidney cancer.

And in these two indications alone, as Laura mentioned, we believe that Nexavar has the potential to reach worldwide net sales of over $1 billion annually by 2010.

Operator, we'll now open the call for questions.

Thank you.

(Operator Instructions).

Our first question is from Jessica Li from Goldman Sachs.

Please go ahead.

Thank you for taking my questions.

First of all, with regard to your '09 Nexavar sales guidance, what's your assumption for the exchange rate?

So Jessica, we-- given all the uncertainty, and Matt may have a comment on this as well, given all the uncertainty in foreign currency rates we're not making a specific projection on what we think it will be.

Currently it's anywhere from about $1.26 to $1.30 recently and we're just tracking it very carefully.

But Matt, do you want to add anything to that?

The only comment I would add is that we're obviously acutely conscience of exchange rates given their importance in our business and our operating plan was built with those rates in mind.

Okay, great.

And your 2010 sales guidance of greater than $1 billion, does that include any other indications?

No, it's just with the two current indications we have now, Jessica.

Great, thank you.

And finally, as you're rolling out the liver cancer indication in such a tough economic environment, I'm wondering whether you can share with us your pricing discussions?

What your pricing discussions are like, how are they different from when you first wrote out the RCC a couple of years ago?

I'll ask Laura actually to make a comment on that one.

Hi, Jessica.

The enormous need that Nexavar serves for patients in both kidney cancer and liver cancer are faced with these deadly diseases really has made the path very clear and straight forward for us around the world in the pricing discussions, even recognizing the world that each of the countries faces.

With Bayer we've been very successful in having a good pricing range worldwide, reflecting the value of the drug to patients.

Great, thank you.

Thank you.

Our next question comes from Jim Birchenough from Barclays Capital.

Please go ahead.

Yeah, hi guys, congratulations on the good volume growth and the guidance for '09.

Just wanted to clarify on the OpEx guidance for '09, was that your own P&L OpEx, is it the JV OpEx or is it both combined?

It was a little unclear to me.

Yeah, it's the total operating expenses for the Company.

One of things, Jim, we're trying to do is to have everyone appreciate the total spend for Onyx the Corporation, which obviously includes Nexavar.

But now that we've got the additional development opportunities with 0801, want to ensure that everyone has a very clear sense that we've got a portfolio basis for our spending.

And so the-- I guess the missing piece is what the JV OpEx is.

Do you have any guidance on that?

I'm going to ask Matt to make a couple of comments.

I will add and there may be some other questions around expenses that Julie and Matt are-- will be available right after the call to go through any detailed questions.

So please do keep that in mind as you prepare your questions for us today.

Matt, do you want to talk a little bit about where we are investing?

So yes we're, as you point out, focused looking at the collaboration OpEx as well.

The key areas in the shared research and development expense, which is as you recall now reported out separately in the new presentation format, will include the additional support of HCC with expansion into new indications as well as new tumor investment types for Nexavar.

On shared SG&A, we're continuing to invest together with Bayer to really accelerate that leadership position in HCC as well as the continued launch, as Laura outlined in her comments, in new countries.

All of that obviously cognizant of Tony's comments of managing Nexavar as a business which includes that focus on that margin from Nexavar.

Just a final question on Nexavar sales in the fourth quarter.

Can you break out what the European sales contribution was?

Jim, we haven't historically and we won't start today breaking out the region sales.

Laura did talk specifically about the 8% growth in the US, which we take as a very good sign of perhaps gaining traction in US market as a result of some of our efforts there.

We haven't broken out the regions specifically and Bayer doesn't either and we won't start today.

But I think it's very fair to say that despite the foreign currency headwinds, we've got volume growth in each one of the major regions across the globe.

Great, thanks for taking the questions.

Thank you, Jim.

Appreciate your compliment.

Our next question comes from Phil Nadeau from Cowen Capital.

Please go ahead.

Good afternoon, thanks for taking my questions.

My first is to follow up on Jim's question on the shared SG&A expense.

It does seem, based on your top line guidance and kind of loose commentary about the bottom line, you've include that you're going to be anywhere from modestly profitable to wisely-- widely profitable.

Could you give us some idea of what is a reasonable SG&A growth rate for the shared SG&A expense in this environment with the launches that you have ongoing now?

I think what we can say that would be helpful, Phil, is that the total operating expenses for Onyx the Corporation will go up by 5% so-- and that is based on the fourth quarter run rate after you exclude the one-time charges for the two deals.

So what we're trying to communicate and what we're saying explicitly is that there will be a modest increase in all of the corporate expenses.

Now I'll remind that you we are continuing the launch process for HCC in several markets including several of the Asia/Pacific markets where we're awaiting both approval as well as reimbursement.

Taiwan is a great example.

South Korea, we're waiting for reimbursement.

And these are such important markets that we want to continue to invest there and get it right.

I think if you can, take comfort in the notion that we are spending just modestly.

We say 5%, for the total business, because we want the flexibility both to support the launches for Nexavar as well as to invest in 0801.

We're well aware that everyone is used to tracking the shared expenses, but we're trying to get everyone very comfortable with the new presentation format and the notion that expenses are really growing very modestly for the total business.

Okay.

Just to maybe boil it down for an unintelligent sell side analyst like myself, since you do record some of the Nexavar SG&A expense on your own P&L and obviously the whole course cost of your 100-person sales force, if your P&L has gone up by 5% then it's hard to see how the Nexavar SG&A expense could go up by any much more than.

It maybe could go up by 10% or so, but it would be mathematically difficult to hit your guidance if the SG&A expense went up by something more several fold above the 5% guidance you're giving for your corporation.

Is that correct?

Yeah, I think that's a reasonable assumption, Phil.

I think that's a good assumption.

Okay, great.

That's very helpful.

And my second question is on renal cancer.

We know that, or we expect that Afinitor from Novartis is going to launch this year.

How do you expect that's going to impact your US sales of Nexavar in renal cancer and would are you doing to defend against that launch?

Okay, good.

Laura, do you want tot ake that one?

Yes, I'd be happy to.

So if you take a look at RAD001 the Phase III trial, which was reported out last year at ASCO, looked at it RAD001 post-TKI, so post-Nexavar and post-Sunitinib.

Actually at least half of the patients were third line patients.

So if we look forward we think that RAD001 may have benefits for patients after they have failed the TKIs.

Nexavar is well established.

Thousands upon thousands of patients and prescribers are very comfortable with the benefits that Nexavar brings to the patients and sequencing is a very important part of that story.

Okay.

Does that help, Phil?

Does that answer your question?

Yeah, I think does.

And then the last question is just on the melanoma data.

You suggested it could be out this year.

We believe that there's a ECOG meeting sometime in April or May.

Do you have any-- is it possible that the data could be out that early?

Yeah, I don't think we-- I don't think it'll be wise for us to comment specifically on timing.

What we've always said is that this is an event accrual trial so we have to wait for all the events to accrue unless there's such a significant difference, so we got an earlier read out either way.

So we probably can't comment specifically either on specific ECOG meetings or when we'd expect the data.

I think let's let the clinicians accrue the appropriate number of events and then we'll be on very strong footing when we do have something to share with you.

Okay, great.

Thank you.

That's very helpful.

All right, thank you.

Our next question comes from Howard Liang from Leerink Swann.

Please go ahead.

Thanks very much, if I could ask a couple R&D questions.

You mentioned that you're starting a combination trial with another oral agent.

I'm not sure if you're referring to Tarceva.

Can you just talk about what is your commitment in terms of support for that trial (inaudible)?

Yeah, sure.

Let me start by talking just a little bit about our HCC clinical development investments, they're the other Phase III investments.

I think one's are well aware that we started a trial, an adjuvant trial, in the third quarter of last year, the so called STORM trial which is an 1100-patient trial.

And this was-- this is a global trial and we are continuing to I think very nicely enroll patients.

We also have a number of studies ongoing looking at Nexavar use in various stages of taste therapy both during and after.

And this particular trial, the combination trial, is indeed in combination with Tarceva.

And we think that this trial with the other efforts that we have underway, both the adjuvant trail and the local regional trials, will give us a very strong sense of all the places Nexavar can be used across the entire therapeutic spectrum from the very earliest moment of diagnosis and therapeutic choice to potentially some of the later stages that we even have the best data going in liver cancer.

Can I ask when will the taste trials read out?

There's a Japan post-taste study that has finished.

We haven't provided any guidance on when that would read out, the data is still under analysis.

And the other taste trials are largely getting underway now.

It's a combination of some Company-sponsored studies that we will be initiating this year as well as some ISTs that are already underway.

And that's actually important data for us, so we're really anxious to get those moving and look forward to sharing the results with you when we have them.

Okay just lastly on the thyroid cancer Phase III, can you tell us about the design?

The design we haven't disclosed yet.

It's actually still being worked on internally, but this is on the heels of such a strong signal from the Phase II study that we talked about at ASCO last year.

We're really happy about progressing this particular opportunity for us.

We were fortunate enough to receive NCCN guideline recommendations for this in the compendia listing on last year.

And in order for us to take full advantage and to promote it appropriately, we thought we'd go out and collect data ourselves and this will be a pivotal registrational trial.

So once we've got the details on the protocol, we'll be more than happy to share those with you, but they should be finalized soon and we're looking forward to enrollment in the near future.

Great, thanks very much.

Thank you.

Our next question comes from Jason Zhang from EMO Capital Markets.

Please go ahead.

Thanks for taking my question.

Laura, for the US sales in the fourth quarter, the 8% increase, could you go a little deeper in terms of the two markets, the RCC and HCC?

Can we assume that the growth is mainly from HCC or you actually saw growth from two markets?

Yeah, Laura, go ahead.

So as I'm sure you are quite familiar with by now, it's hard to break out the specific tumor types and data, but what we can tell you is that HCC is the growth engine for the business.

And so as we look at where we are continuing to gain patients-- new patients and have patients on drug for longer and longer, should really expect that HCC is the big driver to that.

And we had the opportunity to have some early feedback from the market development specialists in key markets.

And do you see the same trend from Europe?

So as we look around worldwide, I think that we really should be thinking in terms of HCC as a growth driver, RCC as a critical cornerstone and the treatment paradigm for physicians and for patients and worldwide Nexavar enjoys a nice position in both kidney cancer and growth coming in liver cancer.

Then a question for Tony.

So for 2009, will you continue to seek new compounds to end license or are you happy with what the options you have gotten so far?

So how should we look at that for 2009?

Yeah, I think what we can say is that obviously we're very happy with the compound that we've end licensed and now have full responsibility for 0801 from BTG.

We're also really excited about the two JAK2 inhibitors that we have the option-- opportunity for.

But we have said, since my first day on the job and we'll continue to say, that we will be opportunistic about any other great asset out there that might be available to us.

One of the things that we do see, which I'm sure many of you see also, is that there are a number of high quality assets.

In company situations where the companies are either running out of cash or have an uncertain ability to push them forward in development, we think companies like Onyx that are well positioned cash wise and with the cash flow we have from Nexavar can take advantage of some of these opportunities and bring these compounds through the clinic and ultimately to market.

So we will remain opportunistic but there's no specific deal on the horizon today.

Thanks.

Thank you.

Our next question comes from George Farmer from Canaccord Adams.

Please go ahead.

Hi, thanks for taking my question.

Of your recorded revenue, can you tell us what portion of that was royalty from Japan sales?

Yeah, we'll take a look at that in-- Matt can look for that, do you have another question while we're--?

Yeah I guess it was just kind of getting back to an earlier question about what portion of your ex-US sales was Europe, Continental Europe versus, I guess, those in Japan and other territories?

Yeah-- go ahead.

So I'm just figuring that in the past when you've broken out the revenue subject to profit sharing in prior quarters, you're not doing that this time and that kind of gave us a handle about what the sales in Japan were roughly.

Yeah, the royalty revenue matched remind me, it's I think for the 12 months ended December 31, it's $2.8 million.

And you can actually find this in the-- it's in the press release under the -- in the table that calculates the revenue from the collaborative agreement.

So it is available in the press release.

Okay great, Tony, thanks.

And then also, as far as your go/no-go decisions in breast cancer what are you looking for from those two trials?

And were there not supposed to be other Phase II trials, randomized studies in breasts, that were also supposed to be investigated-- initiated as well?

Yeah, I'll remind everyone that this was a broad program with five trials that were under development and planned.

Four of those trials are actively enrolling, and the fifth one trial studying Nexavar in combination with the (inaudible) inhibitors, is actually so important to us that we've decided to make that a Company-sponsored trial, and we're putting the finishing touches on those plans as we speak.

For the first two trials, breast cancer trials, where the enrollment is I think easily within sight and actually done last year, we're really just looking for a signal of what Nexavar can do in combination with standard chemotherapy.

Because there is still such a significant unmet needs in this disease, which I consider to be fairly heterogenous, we actually think that any signal that demonstrates an extension of survival in combination with standard chemotherapy would be a very good thing.

And we will then step back and build our plans on what the best registration path forward in breast cancer might be.

The nice thing is that we've got multiple shots on goal in breast cancer across this broad portfolio of studies, and we're really excited about beginning the Company-sponsored initiatives in breast cancer later this year.

Okay, great.

And then, Laura maybe getting back-- circling back on Phil's question regarding Afinitor and the potential competition from that drug, do you have any feel or any data for how Nexavar and Sunitinib are used interchangeably?

Are they used sequentially one after the other, or do you feel that once a VEGFR inhibitor has failed that other lines of therapy are ultimately used?

The-- it's was so interesting when you look at the data both from the marketplace and as shown at ASCO and what you're seeing is that kidney cancer patients are living longer, and they're living longer because they have the opportunity to see both TKIs to see Nexavar and then Sunitinib or the other way around.

And you'll see that in both cases, patients have longer survival.

And so as I said, with Afinitor you're seeing about half those patients were third line, and so is this a drug going to be added to the regimen after failed therapy in TKI?

Sure, there's a good place for that after patients have already exhausted their options on Nexavar and Sunitinib.

One of the things we do know, George, just to build on that is from data presented at ASCO last year, patients with RCC are indeed living longer as a result of sequential therapies.

So where as before we were down to a few short months following diagnosis, patients are according to this one particular trial, are living now to 16 months and greater with 16 being the mean there.

So as the life span continues or gets expanded, if you will, there's a longer period of time for which multiple agents can be used, and this is why we see some of the sequencing that physicians are beginning to do.

This, we believe, presents great opportunities for agents like Nexavar and creates room for agents like Afinitor that we expect will be used later in the sequencing.

Great, thank you very much.

Okay, you're welcome.

Thank you.

Our next question comes from MayKin Ho from Goldman Sachs.

Please go ahead.

Your line is open.

Okay, operator let's-- let me suggest we move on.

We've got time for just one more question.

Okay, our next question comes from Cory Kasimov from JPMorgan.

Please go ahead.

Great, thanks for taking the question.

Good afternoon, guys.

First question here is on (inaudible).

First question on pricing.

You guys took an 8% price increase in the US in January.

In the past you've talked about pricing parody in other regions of the world as well.

Can you talk about how you were able to maintain that going forward or if you're able to maintain that?

Our expectation, and Laura may have a reflection as well, our expectation is-- and the way we always talk about it, Cory, is that our partner outside of the US prices within a band, a pricing band.

And so far we've actually been able to maintain that with very little difficulty at all in most of the key markets around the world.

So we don't expect that there will be a significant issue as long as we continue to operate within that band, which of course, gives our partner some latitude.

But I think it's fair to say that they really are focused on managing within that band.

Okay, great.

And then next question I have is on trends that you're seeing in treatment duration and how that may vary between regions, and this is for HCC.

I will start with the general comment, and Laura can provide some details.

I think one of the things that we are observing is that, A, it's very hard to track treatment duration information.

And I start there just to have context for the rest of what I'll say and what Laura will say.

The A, the audits aren't very good.

B, they're even worse outside of the US.

And C, no physician has to really disclose the diagnosis for which they're writing a particular prescription in any of these markets.

So it's very difficult to track duration therapy by indication, let alone duration of treatment in any setting.

But having said all of that, what we are experiencing is that the longer Nexavar is on the market, the more comfortable physicians are with administering it and the earlier it's being used.

So it's the combination of both physician comfort as well as earlier use in the treatment paradigm that seems to be providing a longer opportunity for patients to stay on Nexavar.

I can't give you a specific number because it is difficult to track, but anecdotally what we're understanding is that patients earlier in the course of their therapy and shortly after diagnosis and appropriate patients are getting Nexavar and we think that's making a difference.

You'll recall in the clinical trials, six months, five and a half months to six months to show on average, and we're really hoping that we're getting close to that in actual clinical practice.

Okay.

That's helpful.

And then lastly, Laura you mentioned in your comments that you expect China to drive growth in '09.

Can you provide any additional insight on some of the early feedback you're getting from that region?

Thanks.

Yes, so actually if we think about Asia/Pacific is a driver and China certainly as part of that.

With the huge unmet medical need that you see in China, in particular, with over 320,000 deaths a year, and as you know the urbanization of the population, Bayer has done a quite an excellent job in the launch of the product which began last July, in July after Nexavar was approved in HCC.

And so as you're seeing those factors, the huge unmet medical need, the centers of excellence which are in the major cities and Bayer's strong position, we really think that China will be important in 2009 and for many years to come.

Great.

Thank you very much.

Okay.

This concludes the question-and-answer session.

I'll now turn it back over to Onyx Pharmaceuticals for closing remarks.

Well Ellen, thank you.

And thank you, everyone who's joined us today.

Just a couple of final points.

With hundreds of clinical trials we have worldwide with the multiple data sets that we're expecting to present throughout the year both at ASCO and elsewhere and with additional trials yet to be initiated, we are keenly aware that the opportunity for growth on all fronts for Nexavar and the Company are significant.

We've achieved our first year of profitability and with a product that is continuing to grow revenues globally, with the guidance we've given this year, which is exciting for us, and the fact that this product provides positive cash flow, we believe strongly that we're well positioned with healthy financial profile and great balance sheet to advance our business and deliver on these growth opportunities.

So we thank you for joining us today.

I'll remind you that Matt and Julie will be available for calls, and we look forward to keeping you apprised of our progress throughout the year.

Enjoy the evening and we'll talk to you soon.

Thank you.

Thank you.

Ladies and gentlemen, this concludes today's conference.

Thank you for participating.

You may all disconnect.