美國安進 (AMGN) 2011 Q4 法說會逐字稿

Welcome to Onyx Pharmaceutical's fourth quarter and full-year 2011 conference call.

My name is Christine, and I will be your operator for today's conference.

(Operator Instructions).

Later we will conduct a question and answer session.

Please note today's conference is being recorded.

I will now turn the call over to Onyx Pharmaceuticals Inc.

Please go ahead.

Thank you, Christine.

Hello, I'm Julie Wood, Vice President of Public Affairs at Onyx Pharmaceuticals.

Thank you for joining us for our fourth quarter and full-year 2011 financial results conference call.

Leading the call today is Dr.

Tony Coles, our President and CEO.

Also providing updates are Dr.

Ted Love, Executive Vice President and head of Research and Development and Technical operations; Dr.

Helen Torley, Executive Vice President and Chief Commercial Officer; and Matt Fust, Executive Vice President and Chief Financial Officer.

Also joining the call is Dr.

Barb Klencke, Senior Vice President of Clinical Development.

Prior to joining Onyx, Barb spent several years at Genentech in oncology clinical development, where she led the clinical programs and filings for Avastin in breast cancer, as well as for Tarceva Prior to joining the industry, Barb served -- Barb as a faculty member in the Division of Hematology Oncology at UC San Francisco, where she completed her internal medicine and medical oncology training.

Please note that we will be making forward-looking statements during this teleconference that could include financial, clinical, regulatory, 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, 2011 expected to be filed next week, as well as to our other filings.

In addition, we will be presenting and discussing non-GAAP financial measures during the teleconference.

For a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures, please see today's press release which is posted on the Onyx website within the news and media section.

A slide presentation that supplements the financial information in this teleconference is also available on the Onyx website.

The presentation is located on the financial information page of the investor section.

With that introduction, I'd now like to turn the call over to Tony.

Thanks, Julie.

Good afternoon, and thanks for joining us today.

2011 really was a remarkable year for Onyx, as we made tremendous progress towards our goal of building a leading oncology Company and creating multiple ways to serve patients.

Within our kinase inhibitor franchise, annual global sales of Nexavar grew to over $1 billion, a significant milestone for any therapy and the first mark of Nexavar as a true oncology blockbuster.

Also within our kinase inhibitor franchise, we expanded our portfolio opportunities with regorafenib, a bare investigational compound which we expect could exceed more than $1 billion in annual sales across a variety of potential indications, starting with colorectal cancer as the first potential opportunity.

For carfilzomib, we executed on a comprehensive regulatory and development strategy, including the filing and acceptance of the NDA.

We have shown that this therapy has clinical activity, and has -- and we have generated promising data across a number of treatment settings including the front line, all of which reinforces our confidence in the value creation potential for our newly emerging proteasome inhibitor franchise.

Building on a productive 2011, by the end of this year, we hope to transform Onyx from a Company with one product Nexavar, which is approved for two types of cancer to as many as three products in seven types of cancer, with a potential for either registration enabling data or regulatory action.

This transformation is being fueled by our cash position and that cash flow from Nexavar, balanced with strategic investment in our proteasome inhibitor franchise, and specifically carfilzomib.

Today Nexavar is a blockbuster drug and the engine for our business, and we continue to enjoy a leadership exclusivity from Nexavar in liver cancer.

As a medicine that is benefiting tens of thousands of patients around the world, Nexavar is generating cash and providing growth opportunity at Onyx.

And this year, we expect to have registration enabling Phase 3 data from two large randomized trials, one evaluating Nexavar's potential in thyroid cancer, and the other to assess it's potential benefit in non-small cell lung cancer.

Beyond Nexavar, at the end of last year, we enhance the profile of our business with a significant interest in regorafenib as an asset of important economic value through our renegotiated and expanded partnership with Bayer.

Together Nexavar and regorafenib represent an unique franchise of two kinase inhibitors with demonstrated clinical activity.

We are working in collaboration with Bayer to advance these agents in a complementary and strategic way, with the expectation to enter multiple solid tumor markets, and gain synergistic opportunities across different patient types.

Regorafenib has already demonstrated exciting results.

Last month, data from a Phase 3 metastatic colorectal cancer trial showed a significant survival benefit for patients who had progressed on all available therapies.

This is the first time in more than eight years that a new compound has extended survival in these extremely sick patients.

And Bayer has indicated that it intends to file for regulatory approval in the first half of this year.

Additionally, in the next few months, Bayer has indicated that we will have top-line data from a Phase 3 trial of regorafenib in GIST.

Across all indications, we estimate that the global market potential for regorafenib could exceed annual sales of $1 billion.

And our restructured agreement with Bayer entitles us to a P&L friendly 20% royalty on net sales without any expense or investment obligation.

Turning now to our proteasome inhibitor franchise, a few years ago we took the strategic decision to acquire [protolix] and a suite of promising assets, which gave us worldwide ownership of multiple innovative agents in the proteasome inhibitor space, the most advanced being carfilzomib.

Since then, we have made great progress in this program by generating a robust set of clinical data for carfilzomib and advancing our multi-pronged development and regulatory strategy in multiple myeloma, a strategy that Ted will describe in just a moment.

In multiple myeloma alone, we have significant potential with carfilzomib and our oral proteasome inhibitor, oprozomib formerly referred to as ONX 0912.

With global rights to carfilzomib and oprozomib, we have broadened Onyx's capabilities in the US and Europe, and we have formed a strategic partnership with Ono in Japan.

As we look ahead, 2012 will be an important year of strategic investment in our carfilzomib development program.

Our cash position along with the cash flow from Nexavar, as well as potential upside in new indications of Nexavar, enable this investment to benefit as many patients as we can across the multiple myeloma treatment landscape.

And we will be working to do this as quickly as we can.

Before I turn the call over to Ted, I just want to take a moment, a personal moment to acknowledge his many contributions to Onyx.

As you may remember, two years ago Ted came out of retirement to join Onyx at our request to expand our R&D leadership team, enhance critical competencies in R&D and technical operations, and advance our portfolio.

While I am really very pleased to say, that he has succeeded in these tasks, most notably in leading the filing of our NDA for carfilzomib.

I have known Ted for over 30 years, and it has been a pleasure to work with him during this chapter of his life.

We are initiating a national search for his successor, but want to take a moment to reflect and thank Ted for his commitment to Onyx, which will continue to his August retirement, and subsequently as a consultant until the end of this year.

Now, I'll turn the call over to Ted to review our clinical development programs.

Thank you, Tony.

With two oncology franchises targeting multiple, solid and hemotalogic indications, our pipeline has never been more robust, and there have never been more near-term milestones than we have today.

Starting with our proteasome inhibitor franchise, we have put in place a comprehensive development strategy to support carfilzomib.

With our initial opportunity in the relapsed and refractory setting, we expect to hear from the agency regarding the NDA for accelerated approval by the end of July.

As a reminder, the basis for the filing was principally focused on data from our Phase 2b 003-A1 study.

The 003 study included a heavily pre-treated patient population with relapsed and refractory multiple myeloma, for which we believe a significant unmet medical need exists.

While we've always recognized the bar is high for accelerated approval, we also believe that it is important to advance this therapy, and make it available to patients as quickly as possible.

To support a full approval in the relapse setting for patients who had one to three prior therapies, we have an ongoing Phase 3 study evaluating the combination of carfilzomib with revlimid, and low-dose dexamethasone versus rev and dex alone.

This study known as the ASPIRE trial is being conducted under a SPA with the FDA and scientific advice from the EMA.

As we just announced, we've completed our target enrollment of 780 patients, achieving this milestone ahead of our expectation.

Depending upon the rate of event accrual, we can have data in the first half of 2013, based upon a planned interim analysis.

We also have a randomized study known as the Focus trial underway in relapsed and refractory multiple myeloma.

The primary endpoint of this study is overall survival of patients receiving carfilzomib versus best supported care.

We expect to complete enrollment in Focus in the first half of 2013.

There is also an interim analysis built into the study design, which may allow for stopping the study before the final analysis.

Also in the relapsed setting, we are finalizing our plan to run a head-to-head trial of carfilzomib against Velcade in patients following one to three prior treatment regimens.

We expect to begin the study this year.

At the American Society of Hematology meeting in December, we saw continuing evidence of carfilzomib activity.

Final data from the 004 Phase 2 study showed carfilzomib ability to achieve promising and durable single agent activity in the relapsed and/or refractory setting.

Beyond the relapsed and refractory patient group, our development strategy is to move into earlier stages of the disease.

Regarding the first line setting in a Phase 1-2 study evaluating of commendation of carfilzomib, regorafenib, and low-dose dexamethasone with 49 evaluable patients reported at ASH, only one patient progressed after a median of 9.5 months of follow-up.

Responses continue to improve with time, with an overall response rate of 100% after four cycles, and 79% complete responses after 12 cycles.

Additionally, the combination appeared to be well tolerated, with limited peripheral neuropathy the despite uninterrupted and extended duration of treatment.

Given these results, which we believe are promising, we are finalizing our strategy to expand in earlier lines of therapy.

Additionally, we believe our oral proteasome inhibitor, newly named Oprozomib and formally known as ONX 912 may expand our opportunity in a variety of settings, particularly in maintenance therapy.

We are conducting a study to assess the optimal dosing for patients with hematologic malignancies, and could have preliminary data by the end of this year.

Turning now to our kinase inhibitor franchise, there are two ongoing Phase 3 studies that could result in supplemental NDA regulatory filings for Nexavar.

The Misson trial is a Phase 3 study evaluating Nexavar as monotherapy treatment in third and fourth line non-small cell lung cancer.

As we monitor the accrual of this event-driven endpoint, we expect to have top-line results in the first half of this year.

The decision trial is a Phase 3 study in thyroid cancer evaluating the primary endpoint of progression-free survival.

For this study we also expect to have top-line data in the first half of this year, based upon event accrual.

Moving to regorafenib, we and Bayer have seen positive results from a pivotal Phase 3 study in metastatic colorectal cancer.

This registration enabling trial met it's primary endpoint, and improved overall survival by 29% with an overall safety and tolerability profile consistent with previous studies.

This indication has been granted Fast-Track designation by the FDA, and Bayer is planning to submit the NDA filing in this indication in the first half of this year.

In addition, regorafenib is being studied in patients with metastatic and/or unresectable gastrointestinal stromal tumors, whose disease has progressed despite prior treatments.

In addition to Orphan Drug Status, the indication has also been granted Fast Track designation by the FDA.

Bayer has initiated -- has indicated that they expect to report top-line data from this trial in the next few months.

As we look out into 2012, this year is a year of important clinical and regulatory milestones for Onyx, and we are looking forward to seeing how we can serve even greater numbers of patients through the diverse and promising portfolio of agents we are developing.

Now I'd like to turn the call over to Helen for a commercial update.

Thank you, Ted.

As Tony mentioned, we are delighted to report the Nexavar global net sales for the full-year 2011 exceeded $1 billion, an important milestone and accomplishments for the brand.

The year ended with momentum, driven by increased penetration in liver cancer.

US sales in the fourth quarter increased 7% to $64 million, resulting in full-year growth of 5% to $238 million.

Having [met attempts] to personally meet each member of the Onyx sales force team, and work alongside the marketing team, these results come as no surprise given the depth of experience in oncology sales and marketing and the tenure of the team.

Outside the US, sales for the fourth quarter increased 8% to $212 million, and for the full-year grew 9% to $717 million driven primarily by demand.

Asia-Pacific and Latin America delivered the greatest sales increases in 2011, while in Europe continued macroeconomic and pricing pressures impacted net sales.

Globally, growth from increased penetration in liver cancer offset sales pressure from increasing competition in kidney cancer.

Looking forward to 2012, we expect growth in demand in liver cancer, driven by continued uptake in emerging markets such as Asia-Pacific and Latin America, and through increased adoption and use by hepatologists and other non-oncologist prescribers.

Globally, demand for kidneys cancer is projected to continue to decline.

Overall, 2012 Nexavar demand is projected to increase by 5% to 8% percent, primarily driven by growth outside in the United States.

Turning to potential new Nexavar growth catalysts, as Ted mentioned we expect data readouts in thyroid and lung cancer in the first half of this year.

If we are successful in getting approvals, Nexavar's market opportunity could grow substantially.

There are approximately 225,000 new cases of thyroid cancer globally each year, of which differentiated thyroid cancer comprises the vast majority.

And there are an estimated 1.1 million new cases of non-squamous non-small cell lung cancer worldwide each year, most of which are diagnosed with advanced disease.

For those advanced patients, a growing number are receiving therapy beyond the second line.

The addition of regorafenib to our portfolio provides another potential growth driver with worldwide sales in colorectal cancer, GIST, and other indications projected to have the potential to exceed $1 billion annually.

Regulatory filings are planned by Bayer for metastatic colorectal cancer in the first half of this year.

In the US, the team and I are preparing for this, and upon approval Regorafenib would be promoted by our Nexavar, and then what would become our kinase sales inhibitor team.

Moving now to our proteasome inhibitor franchise, our immediate focus with the PDUFA date in July is launch readiness.

We have made good strides in developing our coverage, reimbursement, and patient [poor] services plans.

And we have begun adding experienced leaders to implement the plans upon approval.

The sales team will be added based and regulatory progress.

This approach will put us in the path to capture what at a peak, and upon approval of all indications could be a greater than $2 billion opportunity.

In Europe, a small dedicated team has been hired, and is focused on developing the reimbursement and access plans.

As you've just heard, 2012 promises to be an exciting year, with multiple milestones that could place Onyx on an entirely new growth trajectory.

We are focused on increasing treatment penetration, and maintaining our leadership in liver cancer.

And we will be fully prepared to capture new opportunities that come with new indication approvals in our proteasome inhibitor and kinase inhibitor franchises.

Now I'll hand it over to Matt.

Thank you, Helen.

I'll begin with a review of our 2011 financial results, followed by 2012 financial guidance.

Nexavar global sales of over $1 billion in 2011, together with continuing improvements in commercial margin, generated a collaboration revenue of $287 million, an 8% increase over 2010.

Commercial margin for the year grew 2 percentage points to 60%, consistent with our guidance.

Nexavar product development expense for 2011 was $90 million, a 13% decline from 2010, as several Phase 3 clinical trials reach completion.

Nexavar product development is reported as a component of R&D expense, upon Onyx statement of operations.

Net R&D expenses for the proteasome inhibitor franchise were $159 million, compared to $69 million in 2010.

As planned, expense growth in 2011 was led by investment in the carfilzomib Phase 3 clinical trials ASPIRE and FOCUS, and by clinical and commercial manufacturing efforts.

The increase in R&D expense in fourth quarter 2011 was primarily due to the timing of clinical supply and manufacturing expenses, and to the growing enrollment in the ASPIRE and FOCUS trials.

Positive cash flow from our kinase inhibitor franchise and our financial position enables strategic investments in our proteasome inhibitor franchise.

We ended 2011 with $668 million in cash and investments, allowing us to approach 2012 from a position of strength that gives us the financial flexibility to advance carfilzomib and Oprozomib.

Before moving to 2012 guidance, let me highlight two fourth quarter items.

First, the $160 million payment received in connection with the Bayer settlement was recorded as collaboration contract revenue.

Proceeds from this transaction will support the important investments being made in carfilzomib and our proteasome inhibitor franchise in 2012.

Second, as described in the earnings press release issued this afternoon, we reduced the contingent consideration liability in connection with the amended Proteolix merger agreement.

Recall that the Proteolix transaction was structured with milestone payments triggered by achievement of carfilzomib regulatory approvals, with in-time bounded deadlines.

Under Generally Accepted Accounting Principles, we periodically update our estimates of the liability for these potential future payments.

The adjustments in the fourth quarter were primarily driven by updated expectations about the timing of milestone triggering events.

The continued consideration liability reflects our current assumption that we could make up to three potential milestone payments, an $80 million payment due only if accelerated marketing approval for relasped refractory multiple myleoma in the US is received this year, a $150 million payment triggered by approval for relapsed multiple myeloma in the US, and a $150 million payment triggered by approval for relapsed multiple myeloma in the European Union.

Let's now turn to 2012.

Our financial guidance is aligned with the strategic direction you have heard as outline in today's call.

We remain intent on improving cash flow from the kinase inhibitor franchise, and making disciplined investment decisions around our core priorities.

We expect 2012 global Nexavar net sales of more than $1 billion.

Recall that we will not receive royalties on Nexavar sales in Japan beginning this year.

Our 2012 Nexavar net sales guidance, excluding Japan, is in the range of $840 million to $850 million, flat to 2% growth as reported in US dollars, and growth of 5% to 8% on a currency neutral basis.

We anticipate Nexavar sales will be higher in the second half of the year, a result of several factors including the impact of Medicare Part D doughnut hole reserves in the US.

Variables that could influence sales growth include global pressure on pricing and discounts, healthcare reform in various countries, and the dynamics of an increasingly competitive kidney cancer market, along with currency exchange rate movements.

As we enter 2012, we are facing a less favorable dollar euro exchange rate, which is reflected in our sales guidance.

The average exchange rate in 2011 was $1.39 per euro.

Our 2012 forecast assumes an average exchange rate in the low $1.30s, consistent with the current trading range.

We expect continued improvement in Nexavar commercial margin, with 2012 forecast in the range of 61% to 63%.

Key drivers of collaboration and commercial expense will be effective cost discipline, and the impact of currency exchange rates.

Financial results in 2012 may include revenues from other sources, including the first milestone payment from Ono Pharmaceutical, our partner for carfilzomib development and commercialization in Japan.

At this time, we are not providing financial guidance for carfilzomib sales revenue, carfilzomib US commercial launch expenses, or regorafenib royalty revenue.

We will provide an updated financial guidance, as the regulatory path for these products becomes more clear.

2012 expense guidance will be provided on a non-GAAP basis, excluding stock-based compensation, as we believe this is a better representation of our ongoing operations, and is more aligned with how we evaluate the business internally.

We expect non-GAAP R&D expense in 2012 to be in the range of $270 million to $290 million, consistent with our second half 2011 run rate.

R&D expense guidance includes advancement of the ASPIRE and FOCUS trials, an initiation of new carfilzomib and oprozomib clinical trials, partially offset by a reduction in Nexavar development expense of 10% to 15%.

As a reminder, costs associated with carfilzomib manufacturing will continue to be reported as R&D expense until approval.

We forecast NON-GAAP SG&A expense to be in the range of $170 million to $180 million for 2012, also consistent with the run rate from the second half of 2011.

We will continue to make prelaunch investments for carfilzomib in the US and in Europe.

We anticipate NON-GAAP interest expense in 2012 will be approximately $10 million net of investment income.

We expect non-cash charges in 2012 of approximately $40 million for stock-based compensation expense, and approximately $13 million representing the time value of money for contingent consideration expense, related to the remaining Proteolix acquisition milestone payments.

And finally, we expect to pay minimal cash corporate income tax in 2012.

We anticipate a non-GAAP net loss in 2012, a year in which investment in our proteasome inhibitor franchise is expected to exceed contribution from the kinase inhibitor franchise, in which we may have an opportunity to launch carfilzomib in the US, and before we receive revenues from Carfilzomib or regorafenib.

We will continue to be discipline in our investment decision-making, but will not delay the strategic investments that enable realizing the value of carfilzomib and regorafenib.

Tony?

Thanks, Matt.

We are pleased with the progress we achieved in 2011.

This has positioned the Company for potential accelerated growth in several key areas.

Looking forward to 2012, we expect to drive additional value creation through the following key milestones.

First, executing our regulatory strategies for advancing carfilzomib to the market, and into the hands of patients who are waiting.

This includes hearing from the FDA on accelerated approval by July 27, and finalizing our head-to-head strategy versus Velcade.

Two, explore Nexavar's potential in two additional tumor types, with Phase 3 data in both lung and thyroid cancer coming this year.

Three, announcing Bayer submission of an NDA for regorafenib based on the promising Phase 3 data we have seen so far in colorectal cancer.

And finally, determining regorafenib's potential to help patients with GIST based on the ongoing Phase 3 study expected to readout this quarter.

We look forward to keeping you apprised of our progress against these milestones.

Success in anyone of these opportunities could meaningfully enhance Onyx's growth prospects.

And we are pleased with the multiple options we've created for continued future growth.

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

(Operator Instructions).

The first question comes from Mike King from Rodman & Renshaw.

Please go ahead.

Good afternoon, and thanks for taking the questions.

Congrats on a productive year, and Ted, we will miss you.

Thank you, Mike.

I just wanted to first, for Matt, I guess I think we were thinking that you were going to spend quite a bit less in the fourth quarter.

Then you wound up spending, but it is not rolling through into 2012, because essentially your R&D guidance is pretty much where it was on the last call, correct?

So, yes, Matt, why don't you go ahead and take that one.

I think, Mike, if I understood you correctly, the answer is yes, then we would direct you to the second half, rather than the fourth quarter 2011 run rate on R&D expense.

Right.

So fourth quarter is not the run rate, I guess, is an easy way to ask my question.

Right, thank you.

Okay, Ted, and then, I guess my other question is given that you have fully enrolled ASPIRE, that would seem to indicate to me that there is an unmet need in myeloma.

Do you think that is a fair statement and is that something that can bolster your case, when you presumably go to panel for carfilzomib?

I think that I would have to say first, that Aspire is a different patient population, than the unmet medical need which is the basis for our accelerated approval application.

I do, however, think that the rapid enrollment of the ASPIRE is indicative of the excitement about carfilzomib, which I have seen over and over again in every geography I have visited, people are very excited about what the drug does, how well it is tolerated, and the efficacy that we are hopeful that it will provide any combination with rev/dex.

I think one thing I would add to that comment is that I think we all -- everyone is aware that we have an expanded access program, which we launched in the third quarter of last year.

That program had a target initial enrollment of 250 patients, and we would like to share with you that the program has now been over and rolled, and it is in the exact population which is the focus of our NDA.

So we do take that is a very good sign, that there is significant unmet clinical need for relapsed and refractory patients.

And also a good find of support from the clinical community in what carfilzomib might do for their patients.

Operator, let's take the next question.

Thanks, Mike.

Your next question comes from Terence Flynn from Goldman Sachs.

Please go ahead.

Thanks, this is [Vish] stepping in for Terence.

I had a quick question on Mission, do you guys expect to control arm to do better or worse than the control arm in the Tarceva BR 21 trial?

And then a quick follow-up on carfilzomib.

So, I think what we will do is we will ask Dr.

Klencke, Barb Klencke to take that question, Barb?

Thank you, Tony.

I think will need to take a look at the trial results when they are available.

I will say that this is one further line back, in terms of more advanced patients in Mission.

And that represents the evolution of the landscape over the past 10 years or so -- of eight years I'd say, since the BR-21 data that was predominately second line.

This is predominantly third line.

Great, good.

Thank you Barb.

Next question, operator?

The next question comes from Ling Wang from Summer Street Research.

Please go ahead.

Thank you for taking my questions.

Congratulations on the great quarter.

I have two questions --

Thank you.

Thank you very much.

You're very welcome.

My first question is a follow-up for the non-small cell lung cancer, the Mission study, it seems to -- it seems that the data is sort of overdue, given the trial completed enrollment a while ago.

So can you maybe share with us the status of the trial, is that the trial already completed?

Is that in the data cleaning stage?

And then I have a follow-up for Aspire trial.

Yes.

Ted, if you would?

Yes, so I think that we previously announced, I don't remember the exact date now, but it was probably the third quarter of last year -- fourth quarter, we complete -- we announced the completion of the enrollment.

But as you know, the trial completion is event driven.

And so after you complete the enrollment you have to wait on the target number of events, so obviously we don't know the relative proportion of events that are accruing in the active arm versus the control arm.

But it is event-driven, so we will conclude when we hit the target number of events.

Okay.

Thanks, Ted, I know Ling has a follow-up question, Ling, if your line is still open?

It looks like Ling's line has dropped.

All right.

Would you like to take the next question?

Yes, operator, let's move ahead.

Thank you.

The next question comes from the lin of Karen Jay from JPMorgan.

Please go ahead.

This is Karen in for Cory Kasimov.

Thanks for taking my questions.

In carfilzomib, to the extent that you can, can you provide us an update on your interactions with the FDA?

Are you more just definitely expecting a panel now, and are you in preparations for that?

Okay.

I'll ask Ted and Barb to comment on that one.

I'll start, and Barb, feel free to add.

So as expected, we are obviously having ongoing interactions with Food and Drug Administration in support of our application for accelerated approval.

We really can't comment obviously upon the specifics of those interactions, although I would say, if something of a material nature transpired we certainly would notify you of that.

In terms of the ODAC, we don't know.

We've not reached a point where there has been any indication from the Food and Drug Administration regarding their need to take this application to an ODAC.

Okay, I think that addresses that.

We've said all along, that this is a high bar for accelerated approval in a single arm study, and we continue to believe that.

But you should know that the team here is working very closely and very carefully with the FDA to address all of their questions.

Operator, let's take the next question, please.

Thank you.

Ling Wang from Summer Street Research is on line.

Please go ahead.

Welcome back, Ling.

Okay, thank you.

Sorry about that.

So for the Phase 3 ASPIRE study, can you share with us the conditions for treatment on the interim analysis, and also if you can comment on the Focus study that would be great?

Thank you.

Sure, Ted?

Sure.

So we don't, for competitive reasons we don't give out too much detail regarding our trial.

But I can tell you that this will be fairly typical approach of where an interim analysis would be based on some percentage of less than 100% of the total events, than when we project.

And when you hit that percentage of events, you can conduct the analysis.

And if the primary end point is met, the trial is concluded there.

Great.

Thank you, Ted.

Operator, next question please?

The next question comes from Rachel McMinn from Bank of America Merrill Lynch.

Please go ahead.

Yes, thanks very much.

I wanted to ask two questions, just one, your latest thinking on the head-to-head design versus Velcade.

You touched on it, what are the gating factors there?

And I guess, any reason why we shouldn't expect the subQ as the comparator?

And then just to comment or a little bit more expansion on this $2 billion number for carfilzomib that you threw out?

That's -- I guess, are you just referencing the overall Velcade sales number as the market opportunity?

Why wouldn't it be significantly less, especially given the competition and the fact that Velcade is going generic?

Thanks very much.

Okay, I'll ask Ted to comment on the trial design question for the head-to-head, and then the question around subQ.

And then I'll have a quick comment on the carfilzomib potential, and then let Helen jump in.

Okay, hi, Rachel.- so in terms of the rate limiter, you will recall, Rachel, that we produced data with higher doses of carfilzomib that has generated a great deal of excitement.

And we would like to finalize the dose, because we do expect to take a higher dose than we are currently pursuing approval for into that head-to-head trial.

In terms of the design of the trials, we made a lot of progress, although we are not finalized.

We have likely sorted on the idea that it will be carfilzomib, in combination with low dose dexamethasone versus Velcade in combination with low dose dex.

And again, these are patients with one to three prior so-called second line patients.

Finally with regard to subQ versus IV, you will note that the FDA actually approved subQ Velcade as equivalent to IV Velcade.

And as such, we think that it probably would be appropriate to give physicians the option to do whatever they think.

Today, in the US, there is significant use of subQ Velcade, but I think IV Velcade continues to be the predominant route of administrations.

So I think we would likely provide physicians with an option, given the regulatory approval based on the equivalents.

And then in terms of the market dynamics and opportunity for myeloma, let me just remind everyone that today myeloma is as you know, approximately $4 billion to $4.5 billion market opportunity from the three main products used in this particular category.

We expect two dynamics to occur, one, this particular market opportunity is expected to expand to $8 billion by the year 2016 or so.

So we will have some very attractive growth.

And we know that there are significant unmet needs that are not satisfied for patients across all lines of therapy.

And this we've learned through some of our IST work in the front line settings with the complete response, in overall response rates observed in that particular study.

Helen, would you add anything to that?

Yes.

Just to say, Rachel, the projection is based on global peaked revenues, and really looking at all indications, so based on the life cycle plan we have in place, that build on the third line indication, we hope for the second line and obviously, also the plan is to initiate a first-line study.

So that is looking at the full potential for the drug if we achieve our target profile.

Good, good, thank you.

Okay, operator, next question.

The next question comes from George Farmer from Canaccord.

Please go ahead.

Hi, thanks for taking my questions.

I was wondering where your assumptions for regorafenib come from, your sale assumptions.

Is that just in the end-stage colorectal cancer and GIST settings?

Or are you assuming that the drug will be used in earlier lines of therapy?

And then I have a follow-up for Matt.

Why don't you go ahead and ask your follow-up now, George, and we will take those question.

Great, thanks, Tony.

Just regarding the commercial margins for Nexavar, they seem pretty lumpy quarter over quarter.

I think -- you were at 63% in Q3 and 59% in Q4.

Is that going to kind of smooth out over time do you think, as these trials wrap up -- well, actually, no, I take that back -- it shouldn't matter, but nevertheless, should that smooth out?

And then regarding the contingent consideration line, should -- is that an ongoing thing into 2013?

Okay.

Why don't we have Helen start out with commentary on the regorafenib forecast.

And then Matt can take the next two on Nexavar commercial margins, and contingent consideration.

Yes, the $1 billion of regorafenib base, is based on new indications beyond third line CRC and regorafenib.

So it includes a potential to go into earlier lines of CRC and other potential new indications.

And George, some of the studies are already ongoing in the Phase 2 single generating phase, so we will have more information in coming months.

Matt, on the two finance questions?

Sure.

So, first on the Nexavar commercial margin, recall the way that we calculate that is to take a look at the combined cost of goods, selling and marketing expenses for Nexavar on a global basis relative to sales.

What you're seen over the course of time, is a strong upward trend from 53% in 2008 to now 60% for full-year 2011, and guidance for 61% to 63% margin range in 2012.

There will inherently be some variability from quarter-to-quarter as Bayer commercialize the product in 100 territories worldwide.

But we do expect on an annual basis, that upward trend from 2011 to 2012.

With regard to contingent consideration, recall there are two key components in the contingent consideration expense, in the way that flows through the liability on the balance sheet.

The first is attributed to the time value of money, and that we do expect will continue on through 2013, and I offered a suggestion of guidance for 2012, with regard to that number.

The second component is the changes that we make, when there are changes in the facts or our assumptions about making those milestone payments as we did in Q4.

That is inherently difficult to forecast, so we haven't provided guidance on that for 2012.

But that is sort of the updates that would we make periodically as we did in Q4.

Okay, thanks.

Thanks, Matt.

All right, operator, next question.

The next question comes from Yale Jen from Maxim Group.

Please go ahead.

Thanks for taking the questions.

Sorry, I came in late, so I may have missed some of this.

So could you give us a little bit of guidance in terms of carfilzomib, in terms of the CMC portion -- has that been submitted?

And was there any feedback or anything from FDA at this juncture?

Yes, the CMC module was completed and submitted with the rest of the clinical package, so that the NDA is complete.

Some of the things that we included in that were a recommendation to the FDA for how we would ensure continued clinical and commercial supply.

And the preliminary feedback in some of the earlier conversations with the FDA are that they will take all this into consideration, as a review questions.

So we don't necessarily highlight any particular concerns with this portion of the application.

Next question, operator.

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

Please go ahead.

Good evening, thanks for taking my question.

A question actually on Nexavar's performance here in Q4.

It seems to be the second year in a row, where we've seen pretty healthy quarter over quarter growth.

I think it was 14% quarter over quarter last year, and then this year is 10%.

From your prepared remarks, it wasn't clear to me exactly why there is seasonality in the Nexavar ordering patterns.

So I was wondering if you could discuss that?

And last year you in Q1, had a sequentially down quarter is that something that we should be modeling here, or will it be smoother with the transition from 2011 into 2012?

Matt, you want to take that one?

Hi, Phil, thanks.

So you've identified the same trend pattern that we have seen, that typically we've seen stronger sales, particularly in Q4.

It doesn't seem on the face of it that there should be seasonality in the business, and yet we've now seen that pattern emerge over several years.

I would say, as I think ahead into 2012, I would probably flag a couple of things.

First, we didn't see anything unusual in the fourth quarter 2011 results.

So for example, in the US where we have visibility to inventory levels, didn't see a significant change in fourth quarter inventory.

We do know that there are some factors, for example in the US, the impact of Medicare Part D doughnut hole disproportionately affects Nexavar sales in the first half of the year, as patients hit their contribution limits.

So in general, we expect that we will see stronger Nexavar sales in the second half of the year than in the first half.

Okay, good, thanks Matt.

All right, operator, we are ready for the next one.

Thank you.

The next question comes from Ryan Martins from Lazard Capital Markets

Hi, thanks for taking the question.

Just you've talked about initiating a head-to-head study with Velcade in second line, and just want to get some idea of how you are thinking strategically about moving into first line, particularly around times lines given Velcade patent expiry in 2017?

Okay, Ted, do you want to take that?

Sure, so I obviously just spoke a few minutes ago about some of the design elements of the head-to-head.

So I won't repeat those remarks.

But I would say, that we think that there is obviously been a great deal of data already generated, which strongly suggests that carfilzomib is better tolerated than Velcade, appears to have significantly less neuropathy risk than Velcade.

And because patients tolerate the drug for longer periods, we think that could translate into improved outcomes, specifically progression-free survival would be the endpoint that we investigate in such a head-to-head study.

You made a reference to the Velcade expiry, patent expiry in mid 2017.

And our goal would in fact, be to have that trial completed, and the data available significantly before that expiry occurs.

The one thing I want to underscore, and make sure-- everyone understands is that we are actually contemplating two Phase 3 trials.

One will be a head-to-head in the relapsed population, and Ted has nicely described some of the key elements of that design, with more details to come once the protocol is finalized.

We are also giving consideration and expect to initiate a front line study.

We will likely compare ourselves to Velcade.

And that is really to leverage some of the very exciting data that has come out of the University of Chicago in the Phase 2 IST, which generated the 79% complete response in that front line setting.

So we want to try and better understand that, and that is why we designing these two separate Phase trials, which would follow on the heels of ASPIRE and FOCUS.

Operator, let's take the next question.

The next question comes from Marshall Urist from Morgan Stanley.

Please go ahead.

Hi, good afternoon.

Thanks for taking the question, and congrats on a great quarter as well.

Thank you, Marsh.

A couple of questions.

First, just can you walk us through what are the assumptions, from a demand perspective that are in Nexavar guidance for next year?

Are there new country launches, kind of what is in there, if you can give us a little bit more granularity?

Also what we're China sales this quarter?

And then as we think about Velcade -- I'm sorry, excuse me, carfilzomib R&D, the focus in ASPIRE could be winding down.

You have these new trials coming on.

Is this a decent level of spending you think, to support the subsequent development plan that you see?

Or is it going to increase from here, decrease from here, how can we think about that over the next couple years?

Thank you.

Okay.

So Helen, why don't you to just speak a little bit of our expectations for Nexavar for next year.

And remember, the number that we've guided to, does not include Japan, and Matt was clear about that in his prepared comments.

So, I'll ask you, Helen, just to cover that.

I do want to make a general point which is that we are expecting continued leadership in the liver cancer space.

We've watched Sutent fall by the wayside in this particular indication opportunity, and the Bristol-Myers Squibb program and the Abbot programs as well.

We will see what develops there, but we've made the point repeatedly that there is a fine balance of efficacy and safety that is required for these patients.

And to date, Nexavar is the only approved therapy here.

Helen, any more color to that?

And then I'll ask Matt to make some comments.

Just in terms of where the growth is -- it is coming from.

I think Tony said it well, we do expect to see a continued penetration in liver cancer in established markets such as the US and Europe.

And particularly, in emerging markets, key markets in Asia Pacific and Latin America we saw strong growth in 2011, and we think that is going to continue in 2012, and contribute to this overall 5% to 8% demand increase.

Specifically for China, that was one of the strong growth markets in 2011.

Fourth quarter sales were trending $3 million.

And the overall growth for 2011 was 30% over 2010.

So that just gives a sense of some of the momentum in these newer markets that are coming on.

Thanks.

And then Marshall, this is Matt.

With regard to carfilzomib R&D, and more broadly R&D investment in the proteasome inhibitor franchise, probably not yet in a position to give detailed guidance beyond 2012.

But I think you've effectively outlined the key dynamics as we see them.

As you saw from our announcement today on the ASPIRE trial enrollment, we experienced a very fast run-up in enrollment in the back half of 2011.

And so the 2012 guidance that I've laid out for R&D investment in carfilzomib does reflect a fully enrolled ASPIRE trial, and continued enrollment as Ted outlined in the Focus trial, along with importantly, moving forward with the second line head-to-head trial that you heard us comment on.

We do expect that the ASPIRE and FOCUS trials will move through, although without a great deal of ability to be precise about the timing of those events, but consistent with the guidance we gave you on today's call.

And so should see those costs begin to wind down in the coming years, as we ramp up the two Phase 3 trials that Tony outlined.

Keep in mind as well that Oprozomib, is in currently a Phase 1/2 trial, and we also have a life cycle management strategy for that molecule, which will also contribute to the R&D investment in future years.

Okay, good.

All right, operator next question.

The next question comes from Biren Amin from Jefferies & Company.

Please go ahead.

Yes, thanks for taking my question.

Given Mission is tracking longer, to what degree is it due to enrollment of ETFR TKI-naive patients who may be exposed to EGFR TKI after progression, and therefore drawing out the trial?

So, I think I will ask Barb or Ted to take that one.

Barb, maybe you start?

We've not done an analysis of the baseline characteristics of patients enrolling to that trial, so I think it is premature for me to speculate.

Okay.

I think, Biren, we should leave it there, and we will wait for the data.

Next question, operator.

Yes.

The next question comes from [Ying] Wang from Barclays.

Please go ahead.

Yes, thanks for taking my question.

My first question is, you reported 8% year-over-year growth on Nexavar.

How much is driven by volume and how much of that is driven by pricing?

Hi, Ying, it's Matt.

The foreign currency movement was about 5% favorable during 2011.

So the underlying volume growth was representing -- represents the balance of that, so low single digits.

Okay, good.

Next question, operator.

The next question comes from Jim Birchenough from BMO Capital Markets.

Please go ahead.

Hi, a couple of questions, and good luck on your retirement, Ted, well earned.

Thanks, Jim.

(Laughter).

So with that buttering up, hopefully you will indulge a couple of questions.

We are happy too, for you.

So just really down on the accelerated approval filing for carfilzomib and the change in the contingent consideration liability, could you -- and going from 276 to 160, I just want to understand what the prior assigned value for accelerated approval, and what has driven the reduction?

Is it -- 10 month review versus 6 month review, or did you reduce the likelihood of approval?

I also want to understand, did the FDA explicitly say, don't expect a panel, or have you just not heard about it?

And then the final part of the question is, just we heard from Celgene that they are being pushed to produce these dual and tri-refractory patients and show some activity of the drug with pomalidomide.

Has the FDA been pushing you for the same thing with carfilzomib, and do you have that data?

Thanks.

Okay.

So, Jim, I think what we will do is ask Matt to address the financial questions on the contingent consideration.

And then Ted will bat clean up on this one with the ODAC question and the dual refractory.

Hello, Jim, so with regard to the change in the contingent consideration liability, the key driver there is associated with the time bounded milestones that were part of the Proteolix acquisition agreement, where the intent was that those milestone payments were paid on the combination of successful regulatory approval within defined time periods, recognizing that obviously faster approval and faster times to market has more value.

So the primary driver of the reduction you referred to was the impact of timelines, and in particular the 10 month PDUFA clock.

So with regard to the simpler questions, about the ODAC panel, we have not heard anything.

It has not come up in any discussions with the FDA, so we don't have any information one-way or the other, in terms of a likely ODAC.

With regard to your reference about Celgene and subset data that they have been provided, I think I would first underscore, that I think the situation with our application, and what Celgene is doing, is quite distinct.

Keep in mind, Proteolix designed the 003-A1 population, in consultation with the Food and Drug Administration to identify a patient population of unmet medical need.

The majority of those patients have obviously, had refractoriness to multiple drugs.

We have looked across multiple subsets, and one of the things that I think we've said publicly, is that we have been encouraged and pleased that the benefit of carfilzomib has been consistent across all of the important subsets.

But I would draw a distinction between our strategy and our application, and what Celgene is pursuing.

Okay, very good.

Operator, I think we only have time for just a couple more quick questions.

Let take three more questions very quickly.

Thank you.

The next question comes from Chris Raymond from Robert Baird.

Please go ahead.

Than you for sliding me in here.

A couple of Nexavar questions if you will.

And I'm sorry if you have sort of already walked through this, but Tony, your prepared comments with respect to the seven types of cancer with either Phase 3 data or regulatory approval, with breast cancer, I count eight.

Am I counting that wrong, or is there some issue there with the RESILIENCE trial?

I know you didn't mention that in your comments.

And I have a follow-up question on pricing.

Well, why don't you go ahead and ask your second question, Chris, so we can take them all together.

Okay, yes, thanks.

So just noticing your pricing history, the last two increases have been in the low single digits.

And prior to that obviously increases were in the mid to high single digits.

Should we expect, as things progress that part of the reason that your guidance is a little bit lower perhaps that we expected, is that pricing driven in the US?

So, I know that you will certainly understand, that we won't comment on our pricing, either future plans or any competitive issues there.

So that one I won't probably be able to help you with in any case.

But clearly, the prices stand for themselves, and our greatest opportunity for price increase in the United States, and not outside, where we do expect in 2012 to actually have volume growth.

With regards to your question about the three products and up to seven cancers, that does not include breast, because the time for that, is by the end of 2012.

And we talk about that, just to demonstrate the momentum and the speed with which, this portfolio is expected to evolve and to transform itself.

So, we do expect Phase 3 data or regulatory approvals in up to seven cancers across the three products that are the late stage portion of the portfolio.

Operator, next question.

The next question comes from Stephen Willey from Stifel Nicolaus.

Please go ahead.

Hi, thanks for sneaking me in here.

First question I guess, on the regorafenib opt-in, and maybe if you could provide a little clarity around timing there, when that decision has to be made, specifically as it pertains to NDA filing potential approval.

And then presumably when you opt-in on regorafenib, if you are opting in on all indications?

And then just secondly quickly on the expanded access program, are physicians restricted to single agent use?

So are they able to layer in additional agents, in the absence of an initial response?

Thanks.

So, with regard to regorafenib, and I'll ask Ted or Barb to talk about the C-MAP extended access program.

With regard to regorafenib, the terms of our restructured agreement with Bayer include the receipt of a 20% royalty on net sales, which we talked about in the prepared comments.

We do have the right to co-promote in the United States, and do expect to be making that decision soon.

The great part about that, is that it is essentially P&L neutral for us, because Bayer will cover the cost of detailing by our sales force.

So, we will be studying that opportunity.

And, of course, it will be to our advantage to continue to expand our commercial presence in the US, and regorafenib opportunity gives us a chance to do that.

I think with regard to expanded access program, Ted?

Yes.

So your question was, is it single agent Carfilzomib, and the answer is yes.

The C-MAP program is actually been done under a study protocol, just like any study.

And the protocol essentially mimics what we did in the 003-A1 study, and anticipates what our labeling would be for the use of treatment in these patients.

So it is single agent.

Operator, we have time for one final question.

Thank you.

Today's final question comes from Gene Mack from Mizuho Securities.

Please go ahead.

Thanks for taking the question.

I'm just going to list them out.

First, on -- I wasn't sure I followed the conversation on pricing.

Can you just maybe, Tony, confirm for us whether or not there was a price increase in Nexavar in the US during the fourth quarter at some point or late in the third quarter?

And then on the head-to-head tribal with Velcade, is that -- a time -- what would be a timing on initiation?

Is that sort of a post-approval kind of study that you would start up?

Are you waiting for more regulatory clarity on the current application, before you do that, before you start the trial up?

Or should we anticipate that being started up, more near-term, and independently of that?

And then on carfilzomib, assuming you get the -- complete the Phase 1/2 data on schedule, or get the Phase 1/2 data on schedule, what would be the next up for the oral formulation there?

Would you go into a maintenance setting or a front-line setting?

How are you thinking about moving that drug along, based on what you know now?

And then, finally, on regorafenib, when do you think we might find out when there would be another tumor type explored?

Oh -- and then just on the ODC panel -- how do we expect -- I think Ted mentioned that you would let us know if there was any material event that occurred between your interaction with the FDA.

So should we -- if and when if or when you hear about an ODAC panel, should we expect a press release?

How will you communicate that to us?

Okay, Gene.

Why don't I start with the last one, and I'll kind of work my way through them.

No, you should not expect a press release.

When we learn about an ODAC, we will certainly communicate to you in a timely fashion.

But we will want to certainly make sure that we have done all of our internal preparation for that ODAC, and to ensure that we are ready.

So don't expect a press release on that, but we will notify you.

With regards to regorafenib and the development plan for regorafenib, I think everyone is aware that within the next few months, we are expecting data from GIST.

And I did make a comment that there is a Phase 2 study that is ongoing in earlier stages of colorectal cancer.

And we will wait and see whether that provides yet another opportunity to test Regorafenib efficacy -- and stay tuned for more complete discussion on the development plan.

But with the colorectal overall survival data, the GIST data, and now this Phase 2 and earlier lines of colorectal, we've got Bayer -- with Bayer quite a lot on our plate, with regards to the kinase inhibitor franchise.

I think you also asked the question about carfilzomib, and how we would develop it beyond the Phase 1b2.

I think we will certainly take our time, and be very careful in planning this out.

The great news is that we have got a franchise suite of opportunities between Carfilzomib, which is obviously perennial, and now Oprozomib, which has potential to be a first oral proteasome inhibitor therapies.

So you want to do what you can do with any good franchise strategy, and plan the two synergistically, and make sure you cover all the beach heads across all the different patients types.

Maintenance is an obvious place for us to go, because we think that oral administration will be very supportive.

But we want to make sure that we fully characterize and understand the profile of the compound, before we think about putting it into earlier lines of therapy.

I think you had a question about the head-to-head study for Velcade.

It is in the relapsed setting, and we are expecting that that relapsed head-to-head trial will begin this year.

And are working diligently with the IRB's and the panel of investigators who will lead that particular trial.

So stay tuned for information about, first patient, first visit.

And then finally, I think Helen on the pricing?

Yes.

There was a 2% price increase in the third quarter of 2011, and there was a 3.5% price increase in February of 2012, both of those being in the United States for Nexavar.

Okay, very good.

So, let us conclude the call by just commenting once again, we appreciate the well wishes from the group on the phone.

It was a remarkable year, with some significant progress in key areas.

2012 has the potential to continue to redefine the Company.

You've heard about the evolution from one therapy in two cancers, to three therapies in as many seven cancers.

And we'll continue to underscore that theme, as we move through the year and provide critical data.

We'd invite you to stay tuned, as we undertake the multiple near-term opportunities we have to build value, to help patients, and really to establish the next chapter for the Company.

Thanks for joining the call today, and we look forward to seeing you on the road.

Take care.

Thank you for participating in the Onyx Pharmaceuticals fourth-quarter and full-year 2011 conference call.

This concludes the conference for today.

You may all disconnect at this time.