美國安進 (AMGN) 2009 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen.

Welcome to the Onyx Pharmaceuticals 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 will now turn the call over to Onyx Pharmaceuticals.

Please go ahead.

Thank you, Christine.

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 third quarter 2009 financial results conference call.

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

Tony Coles.

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

Michael Kauffman, Chief Medical Officer for Proteolix.

Joining us during the Q & A period will be Dr.

Todd Yancey, Vice President of Clinical Development at Onyx.

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 you to our 10-K for the year-ended December 31, 2008, as well as to our 10-Q for the third quarter of 2009.

In addition, we will be presenting and discussing non-GAAP financial measures in this presentation.

For a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures, please see today's press release which is posted on our website.

A slide presentation that supplements the financial information in this teleconference is available on our financial information page under the investor section.

This includes slides detailing the accounting treatment for the convertible debt.

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

After Tony's remarks, the Management team will review commercial, clinical and financial highlights before we open the call for questions and answers.

Tony?

Thanks, Julie.

Let me start by saying how excited we are with the transformation and the positive evolution of Onyx in the past few months.

Once again we're reporting significant growth for Nexavar and solid underlying fundamentals in our business.

Nexavar continues to be a strong engine of growth for the Company allowing us to strategically diversify our pipeline.

Today's quarterly results announcement underscores our ability to build a sound business, leveraging the success of Nexavar to provide multiple opportunities for growth and revenue.

Nexavar continues to grow as the first and only oral targeted therapy for liver cancer and as an important treatment for kidney cancer.

Nexavar net sales exceeded $229 million this quarter, demonstrating the continued strong worldwide performance with growth in each of the regions.

We continue to increase penetration in existing markets, expand the use of Nexavar in the full range of unresectable liver cancer patients and broaden the access within various geographies.

As a result, we saw 27% growth in global net sales of Nexavar compared to the same period last year.

Based on its efficacy, tolerability and convenient oral dosing, we believe Nexavar has potential across numerous additional tumor types so we are conducting an extensive clinical program to help us determine registration pathways in new indications.

The most recent example of this was promising ruts generated from our broad clinical program in breast cancer, which represents yet another opportunity for Nexavar to provide benefit to cancer patients and grow sales.

Highlights of near term value generating milestones for Nexavar include the following: Continued penetration of existing markets, obtaining HCC approval in Taiwan, which is expected by year-end, securing reimbursement in South Korea, top line results from NExUS, our Phase III lung cancer study, initiation of Phase III clinical program in breast cancer, continuing enrollment of patients in our pivotal Phase III trials including lung cancer thyroid cancer and adjuvant trials in both liver and kidney cancers and importantly data presentation at a variety of medical meetings including December's San Antonio Breast Cancer Symposium showcasing the extensive physician interest in Nexavar's potential.

We're generating compelling clinical data supporting Nexavar's potential in a broad array of cancers which underscores the importance of our approach to maximizing the value of this asset, and based on existing commercial strength and growing revenues, we're able to build a diversified pipeline to provide multiple avenues for future growth.

To that end, we're very excited about our plans to acquire Proteolix, a leader in the science of proteosome inhibition, a proven and exciting anti-cancer target.

This is a key step in our plans to grow Onyx into a leading multi product biotechnology company delivering sustained and consistent value for shareholders.

We believe it's the right acquisition with the right product at the right time as it leverages Onyx's proven expertise in developing and commercializing an oncology blockbuster like Nexavar and provides strategic expansion into the $16 billion hematologic cancer market.

The acquisition offers substantial corporate momentum by providing several additional near term potential value generating milestones and these include important clinical data on Carfilzomib at ASH, the American Society of Hematology upcoming in early December, the initiation of a Phase III combination study in the first half of 2010; a phase II-B top line data read out in the second half of 2010; and a potential NDA filing by the end of 2010 with a possibility for an accelerated approval the following year 2011.

The pending Proteolix acquisition gives us substantially more shots on goal beyond Nexavar, not only with the addition of Carfilzomib but with two other earlier stage compounds, including an oral proteosome inhibitor and an immuno-proteosome inhibitor that appears active in a number of disease models.

In addition, we were pleased to recently announce the advancement of our own early stage pipeline with the initiation of a Phase I trial for the novel targeted alpha-folate receptor inhibitor ONX-0801, exploring its potential in solid tumors.

As you can see, we're building a deep portfolio of important product candidates, selected based on unique and compelling profiles to help people with serious diseases.

These next generation therapies provide us with the opportunity for multiple revenue streams and accelerate our forward momentum as we continue to build a leading biopharmaceutical Company.

Now, I'll turn the call over to Laura Brege to review the commercial and clinical progress with Nexavar and further discuss the Proteolix opportunity.

Thank you, Tony.

We're pleased to report that in the third quarter, Onyx and Bayer achieved a sales milestone with global net sales of over $229 million representing a 27% increase year-over-year.

Approximately $56 million in sales were generated in the United States, and $173 million in sales were generated outside of the United States.

In the US, we had a very strong quarter in demand growth, with growth of over 16% over the third quarter of 2008.

Performance was driven by our solid base of business with our oncology prescribers complimented by growing numbers of non-oncology medical professionals who are instrumental in treating patients with liver cancer.

These specialists, hepatologists, gastroenterologists, interventional radiologists, and surgeons have contributed over 13% of the liver cancer business this year and their contribution to the business has grown, reflecting an immediate impact of strategically putting into place market development specialists to target this group of influential professionals.

Turning to Europe, Nexavar sales continued to be robust in Germany, France, Italy, and Spain.

We expect continued strong sales as we work to increase penetration of Nexavar in both in the existing markets and to expand our reach throughout the broader geographies of Europe, including the Mediterranean and Eastern Europe.

In the Asia Pacific region, China continues to lead with strong Nexavar sales.

Based on recent reports, we expect progress on reimbursement in this key market soon.

Turning to Japan, where Onyx receives a royalty on Nexavar sales, we expect this region to generate significant sales growth for the brand over time, given the high rate of annual liver cancer cases.

In South Korea, we are awaiting reimbursement, which we believe will be by early next year, and in Taiwan, we continue to anticipate approval later this year.

Beyond our approved indications, Nexavar has shown tremendous clinical promise additional tumor types with unmet patient need.

The data we have seen in breast cancer further suggests that Nexavar in combination with capecitabine, may play an important role as first or second line therapy in the treatment of HER II negative metastatic breast cancer.

Remember that 75% of all breast cancers are HER II negative and this disease lacks a globally-established standard of care.

These results represent truly exciting news for breast cancer patients, especially because this would be the first all oral combination regimen available as a treatment option.

The preliminary results reported from the taclitaxel combination study provide a favorable clinical signal for this treatment combination, and supply further evidence of Nexavar's potential activity in advanced and metastatic breast cancer.

The full data set for this trial is expected to be seen at the San Antonio Breast Cancer Symposium next month.

In both of these trials, we are continuing to evaluate these patients for the secondary end point of overall survival.

Additionally, we're pleased to report that we have initiated a Phase III clinical trial, the DECISION trial, in thyroid cancer, given the positive results reported previously.

As a reminder, results from a Phase II open label study in metastatic iodine refractory differentiated thyroid cancer demonstrated with patients treated with Nexavar experienced an overall progression free survival of 84 weeks and this is demonstrated across all histologies.

The DECISION trial is an international Phase III multi-center randomized placebo controlled study that will enroll approximately 400 patients.

In summary, Nexavar is well established globally in two important tumors with over 100,000 patients treated since launch and it is being evaluated in a broad range of clinical trials including multiple Phase III trials designed to identify all those patients who could benefit from Nexavar treatment.

Beyond Nexavar, we have strategically and thoughtfully expanded our pipeline to build a future we envision for Onyx.

With the acquisition of Proteolix, we would obtain worldwide rights to a Phase II-b product candidate, carfilzomib, in the $16 billion hematologic cancer market, and with the opportunity for a near term accelerated approval.

This is a significant addition to the Onyx portfolio, providing for multiple potential revenue streams.

We plan to access the carfilzomib market opportunity in stages.

First, our initial launch is anticipated to be in a relapsed and refractory setting.

This very sick patient population represents an important unmet medical need in this market, and is the basis for our accelerated approval strategy.

Second, through a Phase III combination trial, we plan to expand the approved use of carfilzomib into the second line setting, where we believe this combination has the potential to become standard of care.

Together, these two indications alone have the potential to generate more than $1 billion in Worldwide Sales.

Finally, we expect that carfilzomib has the potential to become an important treatment across multiple lines of therapy, for myeloma patients given its efficacy and tolerability profile to date.

We could not be more excited about the potential of carfilzomib, and look forward to bringing the same drive to realizing the full potential of this agent we applied to establishing Nexavar as a blockbuster oncology drug worldwide.

Now joining us to review the carfilzomib program is Dr.

Michael Kauffman, the Chief Medical Officer of Proteolix.

Michael?

Thank you, Laura.

In 2003 the proteosome was validated as an important clinical target in cancer when Velcade received accelerated approval for relapsed refractory myeloma.

Proteolix scientists designed carfilzomib as a next generation proteosome inhibitor with the very high degree of selectivity and specificity for the proteosome, with the goal of increasing the therapeutic efficacy and reducing the off target toxicities that limit the use of proteosome inhibitors today.

The results of a broad clinical program for carfilzomib are encouraging.

In two ongoing Phase II trials results to date demonstrate that carfilzomib has substantial single agent activity, with the response rate of up to 50% in Velcade naive patients who have relapsed despite multiple prior treatments.

In very sick patients with refractory progressive myeloma who have received an average of five therapeutic regimens, including a median of two Velcade-containing regimens and lidomide and/or Revlamid, patients for whom essentially all approved agents have failed, carfilzomib demonstrated a response rate of nearly 20%, an additional 40% of patients saw their myeloma stabilized.

To put this in context, this is one of the highest disease control rates ever reported in Velcade and IMID pre-treated refractory progressive myeloma.

In addition, carfilzomib was well tolerated with only 2% grade three, four neurotoxicity reported, allowing for chronic administration without obvious significant cumulative toxicity, as reported at ASCO 2009 and ASH 2008.

Importantly, reflecting the momentum in the carfilzomib program, enrollment has just been completed in the 250 plus patient Phase II-b monotherapy study in patients with relapsed refractory multiple myeloma, the pivotal trial to support accelerated approval registration in the United States.

Despite treatment advances in the last several years multiple myeloma remains uniformly fatal, and for patients who relapse after currently approved novel agents and whose disease is refractory to their most recent treatments, there is no alternative course of therapy.

This clear unmet medical need provides the opportunity for a potential New Drug Application filing by the end of 2010 and possible accelerated approval in 2011.

Carfilzomib has also demonstrated efficacy signals in combination use.

In an ongoing Phase I B 2 study evaluating carfilzomib along with Revlimid and Dexamethasone, the combination was well tolerated for prolonged administration, allowing for extended disease control.

Initial data were presented at ASCO in 2009 and recently the lymphoma and myeloma meeting in New York.

Because of carfilzomib's low incidence of observed marrow toxic effects, we have been able to combine the highest recommended doses of Revlimid, 25 milligrams, with the full dose, 27-milligram per meter squared of carfilzomib, even with patients of relapsed or refractory myeloma.

Based on these promising results, a Phase III international trial is expected to begin in the first half of 2010, evaluating the three drug combination against a control arm of Revlimid and Dexamethasone, currently the standard of care for the treatment of relapsed multiple myeloma.

Fundamentally, there is an important opportunity for any agent that offers strong efficacy, combined with improved tolerability across all lines of therapy.

To date, we have not observed any consistent cumulative toxicities that would limit the long term use of carfilzomib as a single agent and in combinations with other active drugs.

Based on these observations, we will be exploring the best clinical pathways to leverage the unique profile of this next generation selective proteosome inhibitor.

Importantly, we look forward to the five oral presentations that we will unveil compelling additional carfilzomib data at ASH in December.

I will now turn the call over to Matt for a discussion of Onyx's financials.

Matt?

Thank you Michael.

I'm pleased to report another profitable quarter for Onyx driven by top line sales growth and increasing commercial margins with positive cash flow to fund the investment in our development pipeline and a healthy balance sheet, we're well positioned for both short and long term growth.

In third quarter 2009 global net sales of Nexavar reached another milestone achieving over $229 million.

This demonstrates excellent year-over-year growth of 27% compared to $181 million in net sales in third quarter 2008.

Non-GAAP net income, which we use to assess the operating performance of the Company was $22 million or $0.35 per share on a fully diluted basis for third quarter 2009.

The non-GAAP net income calculation begins with net income as reported in our Statement of Operations and excludes from that number certain items.

In third quarter 2009, the non-GAAP net income calculation excludes $5 million of non-cash employee stock based compensation expense; $7 million of R&D expense reflecting amount paid to BTG in connection with ONX-0801 club it call development milestone; non-cash portion of interest expense on our convertible debt and transaction of costs associated with the pending acquisition of Proteolix.

GAAP net income for third quarter 2008 was $8.2 million or $0.14 per share also on a fully diluted basis.

Turning to expenses, shared Nexavar sales and marketing expenses incurred by Onyx and Bayer which includes cost of goods sold and distribution expenses were $76 million for third quarter 2009 compared to $74 million for second quarter 2009.

These expenses were lower as a percentage of net sales in third quarter 2009 than in second quarter 2009 as we and Bayer drove continued improvement in Nexavar's commercial margins.

R&D expense was $36 million for third quarter 2009 including the milestone payment to BTG, compared to $28 million in second quarter 2009.

As a reminder, 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 non-cash stock based compensation expense.

Onyx's SG&A expense was $23 million for third quarter 2009 essentially unchanged compared to the second quarter 2009.

This line item includes the cost of our US sales force, the portion of shared Nexavar Marketing expense we incur directly the cost that we incur for general and Administrative support of the Company and SG&a related stock based compensation expense.

For third quarter and year-to-date 2009, we recorded income tax expense of $589,000 and $878,000 respectively, which represents alternative minimum tax owed to federal and State tax authorities.

For the third quarter and first three quarters of this year, in accordance with GAAP, we computed our income tax provision rather than estimating an annual effective tax rate for the full year.

Now I'd like to characterize a few changes on our P&L following the convertible debt issuance in August.

Interest expense now consists of three components.

First, cash interest of 4% on $230 million of convertible debt outstanding since mid August which is approximately $1.2 million in third quarter; second, amortization into expense of the approximately $89 million discount on the convertible debt as required under APB 14-1, which is approximately $1 million in third quarter; and third, amortization into expense of the issuance cost of the convertible debt which represents approximately $78,000 of interest expense in third quarter.

The convertible debt also affects our earnings per share calculation.

We use the if converted method for determining the potentially dilutive effect of the shares underlying the convertible debt.

For third quarter 2009, these shares were not included in the calculation of fully diluted earnings per share.

As of September 30, there were approximately 60 million basic shares outstanding and 61 million fully diluted shares.

As Julie mentioned you can find a more detailed description of the accounting for the convertible debt on our website and Julie and I will be available after the call to answer your questions.

In summary, with new potential indications for Nexavar and pending the close of the Proteolix transaction, the expansion of our pipeline into the $16 billion liquid tumor space with carfilzomib, the Company has the potential to generate multiple and meaningful additional revenue streams.

In order to realize these important near term and long term growth opportunities, we will invest appropriately to grow our business.

We are focused on growing top line Nexavar sales, driving increased commercial margins and rapidly integrating the capabilities of Proteolix and Onyx.

As we plan for 2010, we believe focusing on these key areas will allow for the investment that's needed to develop our high value assets, and I'll now turn the call back over to Tony.

Thanks Matt.

Now with a blockbuster drug in Nexavar serving as the growth engine for the business, a diversified and a compelling portfolio that's growing, of product candidates and improving cash flow, we believe Onyx is well positioned to bring additional new treatments to cancer patients and sustain value to shareholders.

We're committed to growing our business strategically.

Our strong continued financial performance, fueled by growing Nexavar sales and a demonstrated ability to deliver on strategic priorities is advancing Onyx to the next level of corporate growth.

The anticipated acquisition of Proteolix, as well as the promising Nexavar data observed in additional tumor types such as breast cancer and thyroid cancer are creating exciting and unprecedented momentum, fueled by significant progress and several near term potentially value generating milestones.

We look forward to keeping you apprised of our progress at upcoming meetings in New York, New Orleans and San Antonio.

Operator?

We'll now open the call for questions.

(Operator Instructions).

The first question comes from Jim Birchenough from Barclays Capital.

Please go ahead.

Hi guys.

I'm hoping I can get away with a two part question on operating expense.

As I look at the JV, it looks like the commercial margins improved from about 59% last quarter to 63% this quarter.

Is that something we should expect to continue, and what's the right commercial margin in the JV we should consider going forward, and the second part is just on the incremental $25 million in spend on your own P&L that you've highlighted with the Proteolix acquisition, I think we're trying to figure out $25 million on top of what we're seeing operating expenses that are stable second quarter to third quarter, should we assume a stable base into 2010 when we're considering the incremental impact of Proteolix.

Thanks.

Jim I'm going to actually ask Matt to address both your questions.

I'm just going to summarize them to make sure that we've captured them.

Your question is on kind of the target commercial margins that we're seeing.

There was some improvement in commercial margins across the two quarters, and so Matt can comment on that and the additional leverage we expect to get, but I think it is fair to say we expect to get additional leverage and then secondly I think your next one was on the incremental $25 million in added expense as a result of the Proteolix acquisition and we'll cover that as well.

Matt?

So Jim on your first question, on commercial margins, we're very pleased that the efforts put in place both by Bayer and Onyx over the course of the year have lead to the improvement that you've seen in commercial margins in the JV and that will obviously continue to be a focus area for us going forward.

That said, as Laura alluded to in her comments, we do expect additional country launches, notably in Taiwan and Korea potentially in the upcoming quarters and we'll continue to put investment behind the brand.

I'd also note that not uncommonly fourth quarter commercial expenses do tick up so we're cognizant of that on an absolute basis as we move into the latter part of the year.

Really haven't provided commercial margin guidance beyond that, as we look to 2010, but expect that we will be providing you with more detail on our year-end earnings call for guidance for next year.

Turning to Proteolix, and the R&D investment, we did provide some preliminary guidance on the call announcing the Proteolix transaction that we expected an increase on a net basis of approximately $25 million in R&D associated with the Proteolix development programs, but we have not yet been in a position to provide detailed guidance about the other R&D spend for next year, and again won't be in a position to do that until we complete our operating planning for 2010, and would expect to provide that guidance on our year-end earnings call.

As we think about the base of R&D investment however, note that we have advanced ONX-0801 into the clinic this quarter and have the broad array of Nexavar development programs that Laura outlined, so we will be making continued investments on both fronts, both with the Nexavar portfolio and with our other development stage assets.

The next question comes from David Moskowitz from Caris & Company.

Please go ahead.

Thanks, just a couple quick ones.

Any price increases on Nexavar in the US and globally and I guess the other question would be could you give us the currency impact on the Bayer collaboration costs?

Sure.

I'm going to ask Laura to take the first one and then Matt will get the currency information for you.

So on a price basis worldwide, each country has the price in its own currency, so let me just focus a moment on what the strategy is worldwide, is to have the pricing be in a reasonably tight band.

In the US, which is an area that I think we had the most clarity in, there was a price increase taken in the third quarter of 2009 of 10%.

David this is Matt.

On the currency front, we've had a relatively more stable exchange rate environment over the course of the third quarter.

The exchange rate average for third quarter, which is used to translate both revenues and expenses in the context of the Bayer collaboration was $1.43 per Euro.

That's about 5% weaker than the second quarter this year and about 5% stronger than the third quarter of last year.

Okay.

Operator next question.

Thank you.

The next question comes from Howard Liang from Leerink Swann.

Please go ahead.

Thank you very much.

Regarding the potential opportunity for reimbursement in China, do you have an understanding of how many branded oncology drugs will be included in national drug reimbursement list?

I think Howard, it's premature to say because obviously the Chinese government is probably in the throes of that degree of review but I will remind everyone that it is true that none of the currently approved western market target therapies on reimbursement list we got it to be a number of the therapies that have approved in the western markets for several years to come up for consideration and to be included but I don't think we can give you a number specifically.

Thanks.

Operator?

Thank you.

The next question comes from Jessica Li from Goldman Sachs.

Please go ahead.

Thank you for taking my question.

Some of your peers cited challenging reimbursement environment for oral cancer drugs given the slow economy and also lower refill rates that negatively impact their sales.

Could you please comment on whether or not you've observed the same challenges for Nexavar?

So I think it's fair to say and Laura may want to add something here, I think it's fair to say that across the globe obviously the impact of the recession is affecting consumers and patients in a lot of ways, but we've not seen a material impact on our business in any of the regions in a significant fashion.

Certainly the volume demand in the US has picked up quite dramatically since the beginning of the year and we attribute most of this to our driving demand for the market development specialist and the non-oncologists, so I think should these trends continue to hold up we can certainly expect that our sales for Nexavar will continue to grow both in the US and around the world.

I think that probably answers it, Jessica, so Operator we'll move to the next question.

Thank you.

The next question comes from George Farmer from Canaccord Adams.

Please go ahead.

Hi, thanks for my question.

Wondering if you guys have given any thought to trying to secure an SPA with the FDA regarding your carfilzomib plans?

Yes.

The quick answer George is yes we have and it's specifically for the second line relapsed indication.

Michael do you want to talk a little bit about generally how we're proceeding?

Sure.

The Phase II-b that's ongoing for accelerated approval was done with very careful interactions with the FDA and very detailed ones so we're very comfortable that the population we have does represent unmet medical need and we're using the standard international myeloma working group criteria for outcomes and response rates so we are comfortable with that, and as I've said, we've worked very closely with the FDA and also EMEA with that study.

As Tony mentioned, the planned pivotal Phase III for confirming the approval will be initiated in the first half of next year.

This will be under a Special Protocol Assessment which will be submitted to the FDA shortly.

We have again met with the FDA consistently in the design of this study, and feel quite comfortable that they and the EMEA agree with the key design elements of that study so we're comfortable that SPA will be granted and that study will initiate first half next year.

Thanks Michael.

George what I would say is that obviously we're in constant communication with the regulatory agencies so Michael's pointing out that that will continue while we're in the registration process and as we examine the data from the ongoing studies and the future studies, so we hope to be in talks with the regulatory agencies constantly.

Okay, next question, Operator?

Thank you.

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

Please go ahead.

Good evening.

Thanks for taking my question.

Also a question on China as that seems to be an opportunity.

Tony could you give us some idea of what your sales run rate today is in China and talk a little bit more about the process of getting reimbursement.

What do you have to do and how long can it take from an opening of the reimbursement process until patients can get your drug paid for by the Chinese government.

Sure.

Now typically Phil we haven't broken out country sales but our colleagues at Bayer have and so on that basis we're happy to provide them to you.

Let's just go back to the beginning of the year, so for the first quarter of this year, first quarter Chinese sales were $10 million and in the second quarter they were $13 million and in the third quarter they were 15 million.

I think it's fair to say that China is outside of Japan outside of the largest and most notable market in Asia Pacific and is responsible for a majority of sales in that region as a single country and certainly we do expect that ramp to change once reimbursement is granted so we've got high hopes for the future in China.

Okay, next question?

The next question comes from Derek Jellinek from Boenning.

Please go ahead.

Thanks for taking my question.

Maybe if I can circle back to the JV expense line I'm assuming that the 10% year-over-year increase into this year is off the table.

Well it's probably worth some clarification, because we are not changing our guidance at all.

Matt do you want to just provide some expansion?

Yes, we have no guidance update specifically for what remains the last quarter of the year.

As I mentioned earlier we've been pleased both with the rate of top line sales growth and the expense controls that have been put in place by both companies on this expense line, that have gone through the year.

However as I alluded to earlier, we do often see an uptick in spend in the fourth quarter so at this point there's no guidance update on that line.

I think you can expect to see a bump in expenses as we historically have seen in the last two or three years mostly owned to the commercialization of Nexavar.

Okay, next question Operator?

The next question comes from Steve Harr from Morgan Stanley.

Please go ahead.

Could you just give us an overview of what you think it is that you have to show to get accelerated approval now in multiple myeloma, so what is the relevant patient population the FDA is interested?

So Steve, I'll just remind all of our listeners, for those of you that participate Michael covered a lot of this question during the live webcast we held with several of the investigators but I do think it's worth repeating here.

There's various criteria for subpart H acceptance for accelerated approval and in talking about the unmet need so Michael would you mind expanding?

Sure.

As you know, the sub part H and I'm not going to lecture on it you all can look it up has two parts.

One about demonstrating efficacy in a population where there is no reasonable therapy and then there's a second part that also includes the potential for a meaningful improvement in the safety profile of a drug, or drug class, again particularly in patients where having less safety issues might be a key driver, so keep in mind that the FDA has a fair amount of leeway and this has lead Richard Pasteur from the FDA to make statements he's made to us privately as well as publicly saying that really it's about the entire profile of the drug.

They will not give us a particular response rate that needs to be there.

They absolutely look for the patient population to be appropriate and be one of unmet medical need so in discussions with them and also with the key opinion leaders and agreement with the FDA, the patient population is a relapsed and refractory myeloma population.

In our study, the patients had to have at least two prior therapies but they had to include a bortezomib-containing regimen at least one, and they had to receive at least one of the IMIDs and in fact what happened as I mentioned is that the median number of prior therapies in our pilot study with bortezomib was two and in fact 80% of the patients had to have both IMID, both lidomide and lenolidomide, or Revlimid, with 90% of patients having at least received one of those agents each and then again 80% receiving both so this is a heavily pretreated population.

All that receive corticosteroids, all received essentially Alkalating agents, about 80% had undergone transplantation, et cetera.

So the population we had had a median of five prior regimens and they relapsed from that and they had to be refractory to the most recent therapy which means essentially they had to have progressive disease coming on to our study and that allows the FDA to gain insight into the activity of a drug in a single arm study because patients are coming in with progressive myeloma, and that is an unmet medical need and as you finally heard, 80% of these patients come in with active peripheral neuropathy, which immediately prevents them from receiving many of the current and novel therapies and essentially all of them have significant bone marrow suppression, etc.

So the side effect profile of the drug is important as well.

What we reported in the pilot study was up to 18% of the patients had a PR or better, partial response or better, another 8% had a minimal response despite coming in with progressive disease and on top of that, 40% of patients had their disease stabilized.

So well over 60% of the patients coming in with relapsed refractory progressive myeloma so at least disease controlled for a period with a single agent and the rate of grade three three-four peripheral neuropathy was 2% and the rate of serious neutropenia was very low, so we believe this profile is what the agency and what patients and doctors are looking for and the agency will look at both safety and efficacy.

Thanks Michael.

I think we certainly would be remiss if we did not bring this to the agency and really work very hard to get this therapy on the market as quickly as possible given the benefits Michael just reviewed for you.

Operator, we'll take the next question.

Thank you.

The next question comes from Steven Willey from Thomas Weisel Partners.

Hi thanks.

I know you've talked about making a point of focus to leverage Nexavar in earlier stage cancer liver patients and we saw data at the liver conference this weekend.

Can you just remind us what's the status of the enrollment into the TASE trial right now and also into the resection trial and maybe give us a little bit of guidance as to when you think those two Phase IIIs might complete enrollment?

Sure.

I'll actually ask Todd to answer that and actually given your question and the context for it ask him to review our entire Phase III program for HCC.

So Steve, as you are aware we've been talking for some time about our committment to bringing Nexavar forward in HCC across the continuum of the disease having demonstrated the benefit that we did in our two Phase III trials which were stopped early.

Part of that is an evaluation that is in fact broad but includes the Company sponsored study which we call SPACE which is evaluating Nexavar in combination with DCB as an opportunity to advance on patients receiving TACE as their form of local regional therapy.

Additionally we've initiated a trial evaluating the combination of Nexavar with erlotinib.

That trial is referred to as the SEARCH Trial.

Both of these trials are enrolling patients and when they get to full accrual, we will have a better sense of when they may report out.

Critically there's a third trial which is our STORM Trial which is evaluating adjuvant Nexavar for patients with resected liver cancer.

That trial also opened and enrolling patients will offer potential opportunity to demonstrate the benefit for Nexavar even earlier in treatment continuum and then finally we have a broad committment on an international basis to evaluate opportunities to advance on benefit for patients with liver cancer in earlier stages of disease yet again and in addition we are evaluating potential other combinations for Nexavar for patients who require an additional therapeutic, after having received Nexavar in other settings, and so stay tuned for more.

There were over 20 presentations made at AASLD this week, and that gives you a sense I think of what's to come for the active agent that we have here.

Okay, thank you.

Next question, Operator?

Thank you.

The final question comes from Cory Kasimov from JPMorgan.

Please go ahead.

Good afternoon.

My question is on the Nexavar thyroid program, and specifically, what are you guys looking at in terms of the DECISION study for the speed of enrollment.

I'm wondering if there are any interim analyses built into that trial and finally what do you see as the ultimate market opportunity in thyroid.

Thanks.

Todd, why don't you take the clinical design question and then Laura we can I'll ask you to address the thyroid market opportunity.

So Cory, hi.

We have I think a really unique opportunity here.

Nexavar has demonstrated in multiple Phase II trials benefit for patients with radioactive iodine a refractory thyroid disease, where we really have no other available therapies.

The compelling results which Marsha Brose published in JCO demonstrated an 84 weak median PFS for single agent Nexavar across all histologies we have initiated the DECISION trial which is evaluating the addition of Nexavar in patients with differentiated thyroid cancer who particularly benefited, and the studies that have been reported out to date and we do believe that this may offer an opportunity to advance on a progression free survival and survival benefit, for these patients over time and are very very excited to have this trial launched for these particular patients.

So I'll turn a bit to the market opportunity here.

It's a smaller market opportunity in terms of the number of patients, but as you look for where the opportunity exists, it is exactly as Todd described with an 84 week median PFS.

This is a disease that we have the hope and expectation is in fact being treated as a chronic disease so as we look forward to the opportunity to serve these patients and how large it might be for us it would be very important.

Okay.

I think that does it in terms of questions.

We'll close the call by thanking you for joining us.

I'll remind you that the slides to support today's call are in the investor section of our website and we look forward to seeing you at the American Society of Hematology and the San Antonio breast meetings where we will have important updates on the compounds coming forward.

Thanks good evening and we'll speak soon.

Thank you for participating in the Onyx Pharmaceuticals third quarter financial results conference call.

This concludes the conference for today.

You may all disconnect at this time.