美國安進 (AMGN) 2012 Q4 法說會逐字稿

Welcome to the Onyx Pharmaceuticals conference call.

My name is Ellen, and I will be your operator for today's call.

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

Later we will conduct a question and answer session.

Please note that this conference is being recorded.

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

You may begin.

Thanks, Ellen.

Good afternoon.

I'm Amy Figueroa, Senior Director of Investor Relations at Onyx Pharmaceuticals.

Thank you for participating on our year-end and fourth quarter 2012 financial results conference call.

Leading the call is Dr. Tony Coles, Onyx's Chairman and Chief Executive Officer.

After Tony's introductory comments, Dr. Helen Torley, Executive Vice President and Chief Commercial Officer, will discuss the commercial progress in our proteasome inhibitor and kinase inhibitor franchises, focusing specifically on the recent launches of both Kyprolis and Stivarga in the United States.

Next, Dr. Barb Klencke, Senior Vice President of Clinical Development, will provide an update on our global clinical programs.

Finally, Matt Fust, Executive Vice President and Chief Financial Officer, will review our financial results for 2012 and provide 2013 corporate financial guidance.

We will then open the call to questions.

Please note we will be making forward-looking statements during this conference call 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 the prospective supplement we filed with the SEC on January 17 and our 10K for the year-ended December 31, 2012, which we expect to file next week, as well as to our other filings.

During today's call we will be discussing Kyprolis, carfilzomib for injection.

For full prescribing information on Kyprolis, we refer you to the package insert posted at www.Kyprolis.com.

We will also discuss Bayer's Stivarga, regorafenib tablets, which is are approved for the treatment of patients with metastatic colorectal cancer who have been previously treated with currently available therapies.

For full prescribing information on Bayer's Stivarga, we refer you to the package insert posted at www.Stivarga-us.com.

These links are also included in today's press release.

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

For a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures, please see today's press release and slide presentation which are posted on the Onyx website at www.Onyx.com.

I will now turn the call over to Tony.

Thanks, Amy.

Good afternoon, and thanks for joining us today.

One year ago, we made the bold assertion that we had the potential to transform Onyx from a company with one therapy in two indications to one with three approved therapies.

In 2012, we did just that with the approvals of Kyprolis and Stivarga offering new alternatives for cancer patients who previously had limited treatment options.

Over the last 12 months across the Onyx portfolio, we've made great progress both meeting and exceeding important clinical, regulatory and commercial milestones, making this vision a reality.

We enter 2013 with Nexavar, Kyprolis and Stivarga, all now approved across four indications with positive Phase III data in two additional types of cancer, creating the architecture, near term momentum and a foundation for growth.

The next chapter of our story begins now, with Onyx positioned for sustained growth.

This success, the result of several years of hard work by our team, brings us several steps closer to realizing our vision of becoming a global oncology leader.

Let's briefly review our 2012 accomplishments, and then I'd like to share our perspective on the year ahead.

Approved in July of 2012 as Onyx's first wholly owned product, Kyprolis serves as the foundation for our proprietary proteasome inhibitor franchise.

We've executed a successful launch in the United States helping patients who had limited treatment options before this approval and creating significant value for stockholders with a new revenue stream opportunity.

But this is just the beginning, as we are committed to investing strategically and prudently in a comprehensive, Phase III development program across all lines of therapy and myeloma to support additional approvals and expand the indication set for Kyprolis, enabling us to reach more patients globally.

The second launch last year was Stivarga, a Bayer therapy that we believe has the potential to become another global blockbuster.

Last September, Stivarga was approved in the United States for the treatment of metastatic colorectal cancer and is now undergoing priority review in GIST.

While Stivarga has only been available commercially in the United States for less than six months, we're pleased with the strong early physician interest and the important royalty revenue it will generate for Onyx.

In addition, we expect regulatory actions in Europe and Japan this year, opening both of these important markets.

Building on this momentum, Bayer is now executing a broad clinical development program with additional Phase III trials planned.

Our third therapy, Nexavar, which anchors our kinase inhibitor business, achieved another year of strong sales worldwide in 2012.

This globally successful blockbuster generates substantial cash flow to enable our ongoing investment in the future growth of our proteasome inhibitor franchise.

Currently, Nexavar is approved for unresectable liver cancer and advanced kidney cancer.

We expect to file supplemental applications with regulatory authorities in 2013 for an indication to treat thyroid cancer, and we also expect to complete patient enrollment in the breast cancer study, RESILIENCE, in the first half of this year.

Today, our product line is creating value from multiple revenue streams and generating optionality across the business.

As we look ahead, 2013 will be an important year to focus on continuing exceptional commercial execution in the US while beginning to build select capabilities and expand the reach of our therapies to cancer patients in Europe and other key markets around the world.

Before turning the call over to Helen, I'd like to take a moment to mention Dr. Pablo Cagnoni, our newly appointed Executive Vice President of R & D and Technical Operations who will join us next month.

Pablo's accomplished record includes contributing to the development of some of the most successful cancer therapies such as Tarceva, Afinitor and Folotyn, and he brings world class R & D leadership during this exciting next chapter at Onyx.

You'll have the opportunity to meet him in person at upcoming conferences.

Now, let me turn the call over to Helen.

Thank you, Tony.

After launching two products in the United States last year, we began 2013 with substantial momentum projecting continued growth in our two launch brands, Kyprolis and Stivarga.

Beginning with our proteasome inhibitor franchise, we are pleased to report a final total of $64 million in net sales since the launch of Kyprolis in July with $45 million in net sales in the fourth quarter.

We've seen rapid penetration and encouraging depth of adoption by US physicians to treat multiple myeloma patients who have received bortezomib and an IMID and who are progressing within 60 days of their last therapy.

We estimate there are between 10,000 and 15,000 patients in the United States eligible each year under our label for Kyprolis.

This number takes into account a constant influx of newly eligible patients, as well as, sadly, the mortality rate of this deadly cancer.

In the first seven months of launch, we've established a large base of Kyprolis prescribers, with more than 75% of the 2,000 initial high volume target hospitals and clinics having ordered Kyprolis at least once and more than 80% of these accounts ordering more than once through December of 2012.

As we move into the next stage of the launch, we expect quarter on quarter demand growth for Kyprolis in 2013, primarily as a result of new patient growth.

This new patient growth will come from established users of Kyprolis but also from continued expansion of newly adopting clinics and hospitals.

Recent market research continues to confirm that Kyprolis is predominantly being used in our indicated population and with the approved dosing regimen.

Our market share of the total potentially eligible third-line plus patient population was over 30% as we entered 2013.

We're still early in the launch and are continuing to track data to establish patient duration of therapy.

Recall that the mean duration of therapy in our 003 A1 study where patients had received a median of five prior lines of therapy was 4.4 months.

The multiple myeloma market worldwide is expected to expand significantly over the course of the next five years.

And turning our attention to outside of the United States, we're now preparing to bring Kyprolis to additional patients around the world.

In Europe, we are in the initial stages of adding capabilities to be ready to commercialize Kyprolis in the key markets including Germany, France, Spain, Italy, and the United Kingdom.

Today our modest footprint in Europe includes a small core leadership team based in Switzerland who are preparing for potential product launches in these markets following AMA approval, which would be based on positive results from ASPIRE and/or FOCUS.

Beyond the United States and the core European markets, we are assessing opportunities to quickly insure patient access to Kyprolis.

In Japan, Ono Pharmaceutical is developing Kyprolis under our partnership agreement.

Our initial international plans also include targeting countries in the emerging markets that allow marketing authorization based on a US approval, and we are beginning to engage with regulators and evaluating local partners in select markets.

Moving now to our kinase inhibitor franchise, in partnership with Bayer, we launched Stivarga in United States in September of 2012 for its first indication, the treatment of third line metastatic colorectal cancer.

Strong early demand, in part driven by an expected initial bolus of patients, resulted in an impressive first quarter of sales, generating royalty revenue of $8 million to Onyx which represents 20% of net sales.

While it is still early days of the launch, we are pleased with the level of physician adoption of Stivarga.

With approximately 20,000 to 30,000 third line and later treatment eligible colorectal cancer patients in the United States annually, we expect continued growth in 2013 from new patients, and we estimate annual peak sales in excess of $1 billion across a range of potential indications for Stivarga.

Focusing now on Nexavar, global net sales for 2012 again exceeded $1 billion, driven primarily by sales in liver cancer.

Nexavar net sales excluding Japan were $861 million last year, a 3% increase over 2011.

In the United States, annual sales were $257 million.

Internationally, double digit sales growth in emerging markets including Asia Pacific and Latin America offset pricing pressures in Europe.

And in 2013, we expect continued growth from use in liver cancer and demand-based increases in sales in the emerging markets.

Following upon an exceptional 2012, we entered 2013 with strong growth drivers in both of our franchises as we execute our plans to bring us therapies to even greater numbers of cancer patients worldwide.

Now, I'd like to turn the call over to Barb, who will give an update on our clinical programs.

Thank you, Helen.

As we begin this year, our development program has never been as broad and our commitment to bringing new therapies to patients has never been stronger than it is today.

After achieving approval of two new products in the United States last year, we already see substantial momentum in 2013 with the announcement in January of positive results for thyroid -- for Nexavar in thyroid cancer and multiple regulatory actions expected soon for Stivarga.

In our proteasome inhibitor franchise, we're conducting a comprehensive global development program to establish Kyprolis across all lines of multiple myeloma therapy, with three registration enabling Phase III trials ongoing and the fourth to begin soon.

For relapsed and refractory patients, the FOCUS trial is designed to show an overall survival benefit for Kyprolis mono therapy versus best support of care of steroids and optional cyclophosphamide.

This trial is being conducted under scientific advice from the EMA and is intended to support marketing approval outside of the United States.

We could have top line results from a planned interim analysis in the second half of this year depending on the rate of event accrual and success of the interim analysis.

ASPIRE, our trial in the relapse patient setting, is also designed to support filings globally based on a progression-free survival end point.

We could have results from an interim analysis by the fourth quarter of 2013 or later, again depending on the rate of event accrual.

An important part of our strategy is to demonstrate Kyprolis' superiority against Velcade.

We are conducting the ENDEAVOR trial, also in the relapse setting, and are planning to initiate a second head-to-head study shortly, this one in front line setting.

We look forward to providing additional protocol details once our front line program approaches first patient, first visit.

For our protease inhibitor -- the oral proteasome inhibitor oprozomib, late last year, we introduced a new formulation, the extended-release tablet, into the ongoing Phase I-b/II trial.

We are continuing dose escalation, which is proceeding well, and we are preparing to present early data from the small number of patients receiving this formulation at the international myeloma workshop in April and will make this presentation available once the data are public.

Moving to Stivarga, Bayer has a regulatory submission on file in Europe for metastatic colorectal cancer.

In Japan, submissions are filed for colorectal cancer under priority review, and for GIST.

And looking at other indications where Stivarga may have benefit for patients, Bayer is executing a broad global development program and is planning to initiate additional Phase III studies in 2013.

Turning to Nexavar, in January Onyx and Bayer reported the positive top line results from the Phase III DECISION study.

The study achieved its primary endpoint of significantly improving progression-free survival in radio iodine refractory differentiated thyroid cancer patients, and we have submitted this data to ASCO.

Both companies expect the supplemental NDA for Nexavar in this new indication to be filed later this year.

In the advanced breast cancer setting, the Phase III RESILIENCE trial for Nexavar is ongoing, and we are on track to complete enrollment in the first half of this year.

For PD991, or [Paldocyclib], a compound discovered through a research collaboration between Onyx, and Pfizer, we are excited by Pfizer's plans for a Phase III trial.

As you may recall, the Phase II data this compound showed encouraging results for patients with ER positive HER2 negative advanced breast cancer.

Our broad clinical program of registration enabling and data generating studies should allow for a significant number of important clinical and regulatory milestones this year, and we look forward to reporting our progress.

I'll now turn the call over to Matt.

Thank you, Barb.

We enter 2013 with revenue streams from three approved therapies, Kyprolis, Nexavar and Stivarga.

Our business is increasingly robust, offers significant value generating opportunities and is more diversified, reducing dependence on any single asset.

Our kinase inhibitor business is generating increasing cash flow, now from two therapies, Nexavar and Stivarga, enabling the important investments to advance our proteasome inhibitor franchise.

In 2012, total revenue was $362 million and included Kyprolis net sales, revenue from the Nexavar collaboration, royalty revenue on sales of Stivarga by Bayer and milestone revenue from our partnership with Pfizer.

Product sales related revenues from Kyprolis and the Bayer relationship grew 26% over 2011.

In 2012, as you heard from Helen, Kyprolis generated $64 million in net sales recorded on the P & L. There was an additional $10 million in gross deferred revenue on the balance sheet as of December 31, 2012, reflecting Kyprolis inventory at distributors which had not yet shipped to physician offices and hospitals.

The adjustment from Kyprolis gross sales to reported net sales was approximately 19% in 2012, and we expect this gross to net adjustment in 2013 to average 15% with some quarter to quarter variability.

Recall that the gross to net sales adjustment counts for chargebacks and rebates under government programs, a reserve for estimated product reserves replacements, fees paid to distributors and other factors, and may change as we gain more experience with Kyprolis in the market.

Gross margin on 2012 Kyprolis net sales was 98%.

Gross margin in 2012 was high, reflecting product costs which were charged to R & D expense prior to Kyprolis approval.

We expect approximately 90% Kyprolis gross margin for 2013 with higher gross margin in the earlier quarters of the year as our lower cost inventory is sold.

Nexavar collaboration revenue for 2012 was $288 million, driven by sales growth and by an improvement in commercial margin from 60% in 2011 to 62% in 2012.

Nexavar global net sales excluding Japan were $861 million slightly above our guidance range for the year, with growth of 3% over 2011 and growth of approximately 7% on a currency neutral basis.

Stivarga generated royalty revenue of $8 million under our royalty agreement since its late September 2012 US approval.

As Barb indicated, we expect regulatory actions on Stivarga in Europe and Japan this year.

We have earned $3 million in milestones to date under our partnership with Pfizer for palbociclib, including $1.5 million in milestones in 2012.

Onyx is eligible to receive up to an additional $11.5 million in milestone payments and an 8% royalty on potential future global net sales.

Consistent with our guidance, non-GAAP net R & D expense was $316 million in 2012 with higher investment in Kyprolis development partly offset by a 12% reduction in Nexavar R & D expense compared to 2011.

Non-GAAP SG&A expense of $198 million for 2012 was slightly under our guidance with expenses driven in large part by the expansion of US commercial infrastructure to launch Kyprolis.

We ended the year with $493 million in cash and investments and in January, raised $352 million in net proceeds in a public equity offering.

Our robust cash position together with cash flow from Nexavar and Stivarga enables the critical strategic investments to unlock further potential of Kyprolis.

I'll turn now to 2013.

Our guidance for 2013 Nexavar net sales excluding Japan is in the range of $890 million to $920 million, which assumes dollar euro exchange rate in the mid-1.30's, for growth of between 3% and 7% over 2012.

We expect Nexavar commercial margin to continue to increase to a range of 62% to 64% for 2013.

Variables that could influence sales growth include global pressure on pricing and discounts, healthcare reform in various countries, and the potential for federal spending sequestration here in the US along with currency exchange rate movements.

We are not providing net sales guidance for Kyprolis or Stivarga at this time as we're still early in the launches for both products.

I will provide 2013 expense guidance on a non-GAAP basis as we believe this is a better representation of our ongoing operations and is aligned with how we evaluate the business.

The most important driver of R & D investment and future revenue growth is the four Phase III Kyprolis trials across all lines of multiple myeloma treatment.

We expect non-GAAP R & D expense for 2013 in the range of $400 million to $450 million.

One key driver in the cost of these trials is the comparator and combination drugs for which we expect to incur more than $60 million in 2013 expense.

We anticipate Nexavar R & D expense to decline in the 10% to 15% range again in 2013.

We forecast non-GAAP SG&A expense in the range of $290 million to $320 million for 2013, with the increase over 2012 primarily driven by a full year of US commercial support for Kyprolis.

Non-GAAP interest expense in 2013 will be approximately $10 million net of investment income and we expect to pay minimal cash corporate income tax in 2013.

We anticipate a non-GAAP net loss in 2013 as we continue to invest in our proteasome inhibitor franchise to enable the next Phase of growth for Onyx.

As always, we're committed to a disciplined approach to investing in our future growth and look forward to sharing our progress with you.

Now, I'll turn the call back to Tony.

Thanks, Matt, Barb and Helen.

So, after a stunning 2012, we've got the framework in place for near and long-term growth.

We're looking forward to continued momentum with upcoming commercial, regulatory and clinical milestones across the portfolio.

First, continued commercial progress with the ongoing US launches of both Kyprolis and Stivarga, which are both off to a strong start.

Second, advancing the global Phase III development program for Kyprolis across all lines of myeloma therapy, with potential interim data analysis for ASPIRE and FOCUS, as well as progress with our head-to-head strategy versus Velcade.

Third, recording oprozomib data and advancing our very important all proteasome inhibitor program.

Fourth, expanding the Nexavar footprint by filing an SNDA in thyroid cancer and completing enrollment in the breast cancer trial in the first half of 2013 and finally, sharing Bayer's progress with global regulatory actions and clinical trial initiations for Stivarga, including the upcoming decision for GIST in the United States.

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

Thank you.

(Operator Instructions)

Our first question comes from Cory Kasimov with JPMorgan.

Please go ahead.

Good afternoon, guys, and thank you for taking the question.

I just have two, first one is probably for Helen.

Many investors seem concerned about the potential impact of pomalidomide approval on Kyprolis trends, so I'm wondering what you make of the current commercial dynamics and maybe what your market research says about how these products may co-exist in the relapse refractory marketplace.

And then secondly, I just wanted to confirm what Matt just said regarding the net royalty in PD991, did you say that's 8%?

Thanks.

Yes, so Cory I'll do the quick confirmation on Matt's comment.

It is 8% indeed on PD991, or as it's quickly becoming known palbociclib.

Lots of excitement around this as a potential new breast cancer entrant with a Phase III program soon to begin by Pfizer, so it is 8% indeed.

Helen, the pomalidomide question?

Yes, let me start by talking about Kyprolis and then I'll talk about the dynamics in the market we think will occur with the entry of a second treatment for third and fourth line patients.

Seven months into the launch we're obviously very pleased with how Kyprolis is doing, and it's solidly established now as a leading treatment for the third and fourth line patients.

You asked about market research and in a recent survey over 70% of participating physicians who used Kyprolis report planning to continue to use it.

And the drivers for this, we believe, is really that Kyprolis is meeting two of the most important attributes physicians look for when wanting to treat patients with third and fourth line multiple myeloma, that strong efficacy and a good risk benefit profile and also the ability to use the product in a broad range of patients.

So, we feel very good about Kyprolis being very well positioned to be used in newly diagnosed third and fourth line multiple myeloma patients.

And the approval of another agent is really a very good news for patients.

What we're hearing from physicians is that this will actually increase the pool of patients who are receiving novel agents, so more of these patients will be treated with novel agents, a great event for patients, I think you'd agree.

And Cory, the only thing that I would underscore in Helen's comments, which I think were right on target, is that 70% figure she mentioned, it's 70% of physicians indicate a desire and an intent to increase usage for Kyprolis.

So that, we think, is a very good sign and again, supports the very strong start to the launch that we've had.

Operator, we'll take the next question.

The next question comes from Gene Mack with Brean Capital.

Hi, thanks for taking the question.

I actually kind of want to expand a little bit on Cory's earlier question.

I'm wondering if you can just comment on whether or not we might see or the myeloma community might see a bump in combination use in earlier settings of Revlimid and Velcade, If maybe perhaps physicians who would have otherwise saved one or the other therapy for later exposure for a patient if there might be maybe some incentive to combine use a little bit more frequently now that there are newer agents available.

And then just a couple of data point questions.

As you're looking at IMW in April, there are a few studies that are currently ongoing with Kyprolis that, I was wondering if maybe you could comment on whether they might actually appear at IMW.

There's a maintenance study, I think, that includes about 100 patients from prior Kyprolis studies.

And I'm wondering if you guys have been able to collect any data on that and if there's any potential incremental where we might see at IMW, thanks.

Okay, so Gene, I think what I'll ask Helen to do is take the first part of the question, talk a little bit about Revlimid and Velcade use and combination therapy use and a trend towards coupled and tripled therapies.

And then Barb, if could you give us an overview of IMW, the International Myeloma Workshop, and what we can expect to see at Kyoto.

There won't be a lot that we can share today, Gene, but we'll give you color and context for what we think will be presented there.

Helen?

Gene, thank you for the question.

With regard to a combination use, we are definitely seeing an ongoing increasing trend of physicians choosing to use Revlimid and Velcade together in first line.

It actually is one of the most common regimens in some of our most recent market research, so I hope that addresses your question.

In terms of IMW, there's a couple things that I think are going to be particularly interesting.

Oprozomib, we plan to present the initial data on a small number of patients with the oral formulation.

You specifically asked about the maintenance therapy with Kyprolis.

This is a study we call 010.

It's for patients who have been on our 003 A1 study or other similar late line studies who have completed 12 months or longer.

What this does for us is to give us information about very long term cumulative safety, and we've reported some of this data before and we will continue to update that data at IMW.

And then finally, in addition, there will be a number of investigator-sponsored trials.

But again, we'll wait until we see which has been accepted and which will be oral.

And Barb did mention in her prepared remarks some early initial data on oprozomib with the new formulation, which I know a number of people are quite interested in.

We've also got ASCO coming up as well, so be on the lookout for the ASCO abstracts in the next couple of months and that meeting as well where we should have some additional data.

Operator, let's take the next question.

We have Jim Birchenough with BMO Capital.

Please go ahead.

Hi, guys.

Congratulations on all of the progress.

Just a couple questions.

First, just in terms of the span.

I'm just trying to get a sense, when you look at the patients that you're going to have enrolled in studies this year and the cost of comparator treatment, is 400 to 450 at the higher end of what we should expect over the next few years or do you think that's just the beginning of an increasing trend?

And then the second part is just on the FOCUS study, I'm just wondering how you see the risk is having potential cyclophosphamide used as comparator.

And do you have any sense of what proportion of patients in FOCUS are getting the cyclophosphamide in the comparator group?

Thanks.

Okay, Matt, if you could address Jim's question on spend and then Barb, if you could take the FOCUS cytocide question?

Hi, Jim.

Probably easiest to answer the question around the clinical development spend, and obviously the comparator drug is key driver of that.

In the context of a quick drill down on each of the key trials running for Kyprolis, FOCUS AND ASPIRE are the more straightforward to forecast because those trials are both fully enrolled.

And so we're seeing a decreasing number of patients as time progresses with those trials, although as we communicated to you in the second half of last year, duration of therapy for those trials is more difficult to predict.

And we had mentioned particular timing on the ASPIRE trial being a somewhat later readout than we'd initially assumed.

The ENDEAVOR trial just began enrollment in July of 2012, so we are still on the upswing in terms of the aggregate patient months in trial and as Barb mentioned, we will be initiating the front line trial this year.

So, I think in 2013, we'll certainly see a net increase in number of patients on trial.

A bit tougher to forecast in 2014, but I think reasonable to say that for the Kyprolis multiple myeloma trials, 2013 will be one of the highest years of spend.

So, in thinking about FOCUS and what we are seeing, I of course can't talk to the specifics.

There is a fairly common use of cyclophosphamide though.

What we know in terms of outcome for patients who are in this late line of therapy, other literature has suggested that with every single line of therapy, the response rate and the outcome is --diminishes with time.

And we do expect a fairly heavily pre-treated patient population in this trial.

And of course, we still don't know the results because the events are all accruing.

So, I think, Jim, on that one, we will just have to be patient a little bit.

Okay, operator next question?

We have Mike King with JMP Securities.

Good afternoon, guys, thanks for taking my question, and let me add my congratulations for a superb year in 2012.

Two questions.

I just wanted to follow-up on the Kyprolis Pomalyst discussion.

Some of the feedback we've gotten from talking to KOLs is there still might be some hesitation regarding the labeling, specifically with cardiovascular adverse events.

And we've also heard that the twice weekly dosing is obviously a bit of a burden on patients, so I'm just wondering how you're dealing with that.

And maybe if I could just ask further, you did PR, the leukemia study with the substudy with the renal compromised patients, and I'm just wondering how you're taking advantage of that benefit of Kyprolis.

Okay, so Mike, I think on the first one, I'd probably say we're not finding or experiencing an increased or unexpected incidence in terms of the cardiovascular side effects above what we provided in the integrated safety summary to the FDA and what's currently on the label.

It certainly doesn't seem to have impacted uptake, and I think the strong show for the fourth quarter sales suggests that physicians are becoming very familiar with how the drug should be administered, taking the necessary precautions and really making sure that they're following all of the steps to keep patients safe.

But it doesn't seem to have impacted the ramp up for our sales uptake.

And then Barb?

The question on the 005 study?

So, the renal insufficiency data was part of our NDA filing and is part of the information in the label.

And we know from that study with patients who have received chronic renal dialysis or other patients with more mild causes of renal insufficiency, that there's no alteration in dose needed, there's no alteration in the pharmaco kinetics and these patients do appear to benefit and have a similar safety profile to other patients with normal renal function.

Which we think overall is quite good,.

As everyone knows, renal disease or renal impact can be seen with myeloma, so it's good to have a therapy that doesn't exacerbate that.

Barb, would you also make a comment on the twice weekly dosing and some of the efforts we have got underway to look at once weekly dosing, just give color and context.

And then I'll ask Helen to finish the answers to Mike's questions about once weekly dosing.

Yes, we're very interested learning more about alternative dosing schedules for Kyprolis, and we have a study underway in the Champion program.

It started with the first patient back in August of 2012.

It's a Phase I-2 study, so we're currently still in the dose escalation Phase.

And once we identify the recommended Phase II dose, we'll expand in order to look at the efficacy and safety in a larger cohort.

And I can comment on the twice weekly dosing.

Clearly, we've got patients who are really driven for getting a product that's going to work in them, Mike.

And so we are not finding the twice weekly dosing is an issue.

I think we've mentioned before that part of the services Onyx 360 offers is that if anyone does need any help with transportation, Onyx 360 can put them in touch with some local services if somebody needs a ride to or from the doctor.

So, we really have not found that to be a barrier to use.

Okay, good.

Thank you guys.

Operator, let's take the next question.

We have Rachel McMinn with Bank of America Merrill Lynch.

Thanks very much.

A couple of quick ones.

Wanted to know, I know you aren't giving guidance for Stivarga, but was there anything in the fourth quarter that's one-time, or is that a -- do you view that as a reasonable run rate?

Tony, I was very interested your comments on proteasome inhibitors potentially beyond oprozomib that it sounded like you hinted at.

Was wondering if you could comment further on that.

And then just lastly on M & A, just given post equity, I'm wondering if some of your investment comments require you to go external and how we should be thinking about that.

I think that's been a topic on a lot of people's minds post equity.

Thanks.

Okay, Helen, if you could do the run rate for Stivarga, and I'll come back and address the next two.

Rachel, thanks for that question.

If we can think about the advent of a new agent for patients with metastatic CRC who had failed all of their prior available therapies, we do project that there was an initial bolus of patients in the fourth quarter, particularly in the first few weeks in launches, physicians and patients frankly were waiting for Stivarga.

So, as you think about fourth quarter, some degree of bolus, and we do expect as we enter 2013, we're worked through that bolus and we'll now start to see new patient growth from ongoing demand.

And then Rachel, on oprozomib, I believe what I said was we were going to present data on oprozomib as our next oral proteasome inhibitor, so there isn't anything better formed beyond oprozomib.

We do have our internal discovery team looking at alternatives, but all of that work is really very, very early, and it is only oprozomib as our next potential proteasome inhibitor.

And that, of course, would be the oral, and we've got a lot of excitement around that, given what's happening in that space.

In terms of M & A, we've been successful by opportunistically being open to a variety of transactions.

We certainly did some smaller transactions in the early days of my tenure, licenses and options, et cetera, and I think we have to continue to do those.

We don't have internal discovery, so we will of necessity, if we want to expand the pipeline, need to continue to look outwards.

But I like to remind everyone it will be across a range of transaction types, Company acquisitions, product acquisitions, in license opportunities, options, et cetera.

And most of the proceeds from this last cash raise really will go to support our ongoing operating expenses and the launch of Kyprolis.

So, we'll maintain both tracks, keep the ongoing business running, and we've got plenty of cash to do that.

And then think very clearly about how we want to continue to expand the pipeline in the months and years ahead.

Operator, let's do the next question.

We have Chris Raymond with Robert W. Baird.

Good afternoon, this is Laura Chico in for Chris Raymond today.

Congratulations on the quarter.

Thank you.

I guess, well, just focusing back on Kyprolis a little bit, was recently added to the NCCN guidelines, and I know an earlier question had been around the cardiovascular safety.

Just wondering what impact has addition to the guidelines had?

And then also thinking ahead, you mentioned ASCO.

What should we have on our radar as we head into that season as well?

Okay, I think on the NCCN guidelines, I'll give a little bit of context there.

Obviously, Kyprolis is approved for use in the advanced myeloma patient.

There have been a number of questions around earlier use of Kyprolis vis-a-vis inclusion in the NCCN in guidelines.

It's certainly premature to speculate on that.

The NCCN is an independent process.

We do support their decision-making with data that's already publicly available, so I think we'll just have to stay tuned and see how and whether they would want to consider inclusion in the guidelines for Kyprolis in any other setting.

But for the moment our reps are trained, and we will continue to stick to the on label message for the advanced myeloma patient.

In terms of ASCO, Barb, can you give us a little bit of color on some of the things that are being planned?

Well, I think I would highlight two things.

The thyroid cancer data, the DECISION study has been submitted to ASCO, and also updated data on the 006 study.

006 is an early Kyprolis study that we had performed, and we've previously reported response rates.

This is with the CRD regimen in relapse patients.

It is -- this ASCO data will have the PFF data.

006 is a fairly heavily pretreated patient population different than the ASPIRE study population, though.

And beyond that, we'll have, again, a number of investigator sponsored trial updates and some new data from other investigator sponsored work there.

Okay, good.

Thank you, Barb.

Thank you for that question.

Operator, we will take the next one.

We have Howard Liang with Leerink Swann Company.

Thanks very much.

I just have a couple related questions to oprozomib.

Maybe if you can talk about the benefit of the new formulation, whether you are able to solve the GI toxicity issue.

And can you talk about what those levels you've been treating the patients with, with a new formulation continuing from, I think what was equivalent to the 210-milligram in the previous formulation?

And then maybe lastly, how do you plan to develop this agent next?

Are you -- would you consider moving to Phase III directly from Phase I?

Barb, you want to start that?

But I may have a couple of comments on that, but why don't you start?

Well, with the new formulation of oprozomib, it was our intention to really address the GI toxicity, and so all of our preclinical modeling was looking for a therapy, a new formulation that was more tolerable.

It's an extended-release tablet, and indeed, initial preliminary news is good.

Just anecdotally though, we're doing our analysis now for the IMW presentation.

What we also are seeing is that we're still able to dose escalate.

We started it a little bit below where we had been with the older formulation, and we're continuing dose escalation at this point in time.

So, I think we've not talked a lot specifically about our Phase III programs, we're waiting to identify the optimal dosing schedule in these early Phase studies.

And Barb, the only thing that I would add to that are the data that we're at ASH, looking at the degree of proteasome inhibition for oprozomib, which, Howard, we think should serve as a rough proxy for clinical efficacy.

We've talked about this before.

If carfilzomib is at the upper end at about 95%, oprozomib, we think, is somewhere between 80% or 85%, or so in the final analysis.

And we think that that -- we expect that will correlate with a good degree of clinical efficacy.

So, we've got to see if we've got the right formulation, and we've got an update there, we're cautiously optimistic and we're pushing the dose.

So, we are running as hard and fast as we can on that.

Operator?

Next question?

We have Robyn Karnauskas with Deutsche Bank.

Great, it's Olethia for Robyn.

We just want to offer our congrats on a wonderful 2012 for you guys, but thanks for taking my questions.

One on Pomalyst and one on FOCUS.

How do you view the slight pricing increase on Pomalyst?

Is there any advantage there?

And then second, can you remind us how you're thinking about the EU and the FOCUS on ASPIRE trials and the importance of FOCUS for the EU approval, relatively speaking?

Thanks.

Okay, sure.

I'm not sure we'll be able to help you on the Pomalyst pricing question.

It's obviously Part D reimbursement compared to part B reimbursement for Kyprolis.

I don't know how much of a difference that will make in the marketplace where we probably don't have much more beyond that.

And Barb, do you want to talk a little bit about our European registration strategy?

So, as you know, the European health authorities will only take one application at a time, so at least with the first application, we have to have it fully reviewed before we can submit the second one.

So, what we were doing is just really looking at the timelines and keeping all options open.

One or both of the studies could be positive at their interim, and then it really just is a matter of timing of what we have.

But we're doing a lot of planning so that we're ready to move forward as quickly as possible, whichever avenue becomes available to us, because our overarching goal is to insure that Kyprolis is made available to patients as soon as possible.

Yes, okay, perfect.

That is terrific.

Thank you for that question.

Operator, let's move on.

We have Biren Amin with Jefferies.

Please go ahead.

Yes,, hi.

Thanks for taking my question.

I just want to confirm that the FOCUS data set, is that going to be an interim data set in the second half, or is that on final analysis?

And also, I think the Hajek paper suggests that your stats assumptions on final, you're looking at, I think a 30% improvement on OS.

So, could you maybe share what the hurdle rate would be for on interim?

Thanks.

So yes, it's an interim that we're looking at in the second half of this year, and you're right.

The target hazard ratio is looking for 30% improvement, but we're not going to talk about what sort of P-value we need or specific data across the boundary at the interim.

Okay, good.

Thank you.

Next question?

We have Phil Nadeau with Cowen and Company.

Please go ahead.

Good afternoon.

Thanks for taking my questions.

Just two follow-up questions.

Helen, in your prepared remarks, I think you used the words continued quarter-over-quarter growth to describe Kyprolis' trajectory in 2013.

Can you clarify if that's what you said and more specifically, do you expect Kyprolis to grow each quarter in 2013 through the launch of Pomalyst?

And then second, follow-up question on Biren's question.

I know that you won't give us the stats for FOCUS or ASPIRE at the interim, but could you give us some sense of your confidence that FOCUS and ASPIRE will be stopped at the interim?

Are you very confident or somewhat confident, not at all confident?

Some qualitative understanding would be helpful, thank you.

Yes, I think on the last one, Phil I'm going to save Barb on this one.

I just don't think we know.

It really will be dependent upon the number of events that accrue, and it's harder to give anymore guidance.

We actually wish we knew the answer to the question which would give us a lot of comfort about the potential outcome, but I don't think we'll be of much help there.

Obviously, as soon as we can, we'll bring you the breaking news if we've got events fully accruing and we've got great top line data.

So, know that we'll come to you as quickly as we can on that.

Helen, do you want to talk a little bit about the quarter-over-quarter demand growth question?

Yes, Phil, I did say that we do expect to see a continued quarter-over-quarter demand growth.

And if you think about the elements there, maybe that would be useful for me to go through.

We've got an increasing number of adopters of Kyprolis, so that's in the hospitals and clinics.

A great base established in 2012, but we do expect that to continue in 2013.

And that's going to be the source of growth which will come from new patient starts, but also from an ongoing bolus of patients who will be continuing patients.

So, those are the sources of growth that we think are going to happen.

Importantly, we also shared a bit of market research, a set of physicians when asked, 70% of them plan to increase their use of Kyprolis in the future.

All of those dynamics come together to give us confidence we are going to see increased quarter on quarter demand growth.

Next question, Operator?

We have Geoff Porges with Bernstein Research.

Thanks very much for taking the question, and likewise, congratulations on all the progress.

I'm glad Pablo is going to have some money to spend.

(Laughter) Well, the great thing is that he's got a great asset to work on.

That's absolutely true.

Now Helen, look, you and I have talked a little bit about this before, but I just want to reconcile something that you said, which is that you had 30% penetration at the end of the quarter, and I think you said 25% earlier in the quarter, of the 10,000 to 15,000 patients.

And that sounds like 3,000 to 4,500 patients carried at the end of the quarter which would suggest a higher revenue number then that that implies by your gross to net price adjustment.

So, what am I missing?

Is the 30% penetration of a smaller number?

Because it feels as though you've got 2,000 patients at the end of the quarter, not what would be implied by 30% of 10,000 to 15,000, thanks.

Maybe a hard thing for us to discuss is the specifics on the call.

Maybe we can follow-up afterwards, Geoff.

But we did say we'll get greater than 30% share of the total patients as we enter 2015, and that is where we find ourselves.

So, we haven't talked about specific patient numbers that would imply, but perhaps we could take it offline and just I could get some more specifics of your question and be able to address them.

Let's try that.

I think we'll underscore the greater than 30% number because we've watched this march steadily upwards and with a continued quarter-over-quarter demand growth, still expect a good year for Kyprolis.

Operator, let's take the next question.

We have Ryan Martins with Lazard Capital Markets.

Please go ahead.

Hi, thanks for taking the questions.

Just a couple.

One is on the -- the drug's been on the market, that Kyprolis, for about eight months.

Was wondering if you could maybe talk in terms of what the duration of the use has been.

And obviously with the Pomalyst launch, how that may change, that Pomalyst being used either before or in combination with Kyprolis.

And the second question is, obviously with the data you have on your stages of myeloma, how many lines of therapy, you're still on the potential for a compendia listing for earlier lines of therapy.

I know that the NCCN has myeloma guidelines committee meeting in May.

Was wondering if you could confirm if that's something that could be discussed.

Okay, Helen if you could take the DOT question and the Pom question, and I'll ask Barb to make some additional comments to the NCCN question, which we did talk about a moment ago, but Barb might have a little more color for us.

Yes, in terms of duration of therapy, this is something we are still tracking where we're going to need some additional cohorts to really feel confident that we understand how long patients have remained on therapy.

Recall in study 003 A1 which were patients who'd received a median of five prior lines of therapy, it was 4.4 months.

So it still is actually quite early to truly have a clearer view of what the duration of therapy is going to be.

With regard to Pomalyst and the order the physicians are going to use the products in, physicians are going to make treatment choices based on a number of factors, the efficacy, the risk benefit, patient characteristics and responses to prior therapies.

Kyprolis, we believe, and I've heard from physicians, has got the attributes physicians want.

It' got strong efficacy, it's got a great risk benefit profile, and it's suitable for a broad range of patients.

So, that is why in 2013 we project to see continued healthy growth in new patient starts.

And the other important dynamic we talked about is the entry of another agent for these patients that's going to expand the overall pool of patients.

So, as you're thinking about it, there are going to be more and more third and fourth line patients getting novel agents.

Excellent, good, thank you.

And then Barb?

So, you're asking about the compendia listing process.

We certainly do know that their next meeting is in May, and we have provided to them data sets that have been publicly presented, including some of the first line data from our investigators such as Dr. [Jakaboviak], or Dr. Ola Landgren, CRD regimens.

So beyond that, we can't speak to how their decision making will go, nor what's on their agenda, specifically in May.

Okay, good.

Thank you.

Okay, Operator, let's move on.

We have Salveen Richter with Canaccord Genuity.

Please go ahead.

Hi, this is Andrew on for Salveen.

Thanks for taking my questions.

You mentioned before the 006 study is going to be at ASCO, and I think you said there won't be a lot of read through there for ASPIRE, but given it's a similar drug, what kind read through can we expect.

And then secondly, IMW, the oprozomib data, I realize it's a myeloma meeting, but are we going to see any kind of non-myeloma data or if not, when might that be coming?

Thanks.

Okay, Barb, I think that one -- those two are for you.

So, the 006 study did allow patients who were Revlimid treated as well as Revlimid refractory.

The vast majority of 006 patients were Revlimid treated, and over half of those who had received prior Revlimid or were Revlimid refractory.

And I'd just emphasize that because in the ASPIRE study that is an obvious exclusion, given that the control arm patients will be receiving Revlimid and Velcade.

So, I think that's just one example of how the eligibility criteria and the patient characteristics will differ.

In terms of non-myeloma data, IMW, Ola Landgren has its myeloma, but it's smoldering myeloma.

It's one earlier line of treatment.

That data set will be presented at IMW for the first time, or at least it's been submitted to IMW.

I'm not aware of any data for, say a lymphoma or solid tumor data sets that are going to be presented at that or any upcoming meetings this half of the year.

Good, so mostly the myeloma and the smoldering myeloma data.

That's right.

IMW, okay.

That tends to be the primary thrust for the meeting and then obviously, stay tuned for more updates.

Okay, operator, we'll take the next one.

We have Marshall Urist with Morgan Stanley.

Please go ahead.

Yes, hi, guys.

Good afternoon.

Thanks for taking my questions.

So, just a couple things from me.

So first, it would be helpful maybe on the ASPIRE event rate, I know you gave the same kind of timing of the potential interim analysis, but was just curious on -- has that rate kind of stabilized, and are you guys getting comfortable that the kind of range of outcomes in terms of when it may come is narrowing?

Or is that something that's still up in the air of terms of where that event rate's going to settle.

And then second, for Helen, just two other questions for me on Kyprolis.

First, there's been several questions about this, and I just wanted to be clear on the exact definition of when you guys, say, line three plus patient shares.

So, is that a cumulative patients treated to date of the 10,000 to15,000 patients?

Or is that kind of incident patient share of the number of third line patients in the fourth quarter?

Just trying to get a sense of exactly what that number means to kind of help us think through this.

And then just on bolus patients, just curious what your feeling is right now and where you guys are in terms of the EAP patients and the bolus of patients from early on.

Are we still carrying those in the number and how you think that might play out over 2013?

Thanks a lot.

Okay, good.

Thank you.

Barb, any comments you want to make on ASPIRE?

Yes, we are -- we did confirm today that our target timeline is very similar to what we had presented before, so Q4 or later is the same as we had been seeing before.

That said, it is three quarters away, and we do continue to watch that.

And as we get closer and closer it becomes more accurate as your confidence in the rules around the timing begin to narrow.

We'll continue to update you if there are any additional changes over time.

And with regard to the 30% number, what does it refer to, it actually refers to a total population.

So, that would be a mix of prevalent patients, as well as newly incident patients, the months that we did the last survey on.

So, we said that was the results of entering 2013, so that 30% of the newly incident bound patients in December as well as the prevalent patients.

And with regard to the EAP patients, we don't know specifically what happened to every one of those patients, but we do know that that patient population was similar to the patients who were in 003 A1.

They had multiple lines of therapy, and so based on that, we do imagine that they would be in the four to five month of therapy range and that those patients would for the majority have already discontinued if they were indeed as like 003 A1 as we thought.

But I don't have specifics on what has been the outcome for that population.

Okay, very good.

Next question, Operator?

Terence Flynn with Goldman Sachs.

Hi, thanks for taking the questions.

First, just was wondering what month you guys conducted your most recent market research.

And then second follow-up to that is any sense of the percentage of patients coming onto Kyprolis whose last line of therapy was Velcade versus Revlimid?

So, I know most patients have gotten both drugs, but what was their previous line of therapy prior to coming on to Kyprolis?

And then you guys didn't mention the Nexavar STORM trial, was wondering if there's any update on timing there and thoughts on market opportunity and how to think about that.

Thanks a lot.

No new updates on STORM.

As you'll recall it's an adjuvant study so these obviously take time.

And we're letting that time pass for the study events to continue to mature.

A little bit of color on the market research, Helen?

Yes, that latest data point we had of Kyprolis having greater than 30% share of the third line plus patients was conducted in December.

And with regard to, if I understood your question, what percentage of patients had received Velcade and Revlimid, per our indication, all patients had to have previously been exposed to Velcade or Revlimid, or Thalomid.

If your question is more, how many patients ave received Velcade and Revlimid as front line combination therapy, that's a very small portion of patients today.

The majority of our patients had sequentially had Velcade and Revlimid.

Okay, very good.

Operator, we are just past the hour, and probably have time for two more quick questions, please.

Okay, we have Ying Huang from Barclays.

This is Christina Zhang on behalf of Ying Huang.

I wanted to also congratulate you guys on the great launch so far for Kyprolis and Stivarga.

My first question is, I understand that you feel Kyprolis is still in the early stages, but I'm curious as to when you guys would feel comfortable providing guidance for Kyprolis sales in 2013.

And secondly, I wanted to revisit your business development strategy.

Is it fair to assume that you guys are interested a relatively early stage asset, that being Phase I or II, in hematology and oncology?

Okay, Matt, why don't you take the guidance question and I'll close with BD strategy.

Sure, hi Christina.

Unfortunately, because we are still in the very early days of the launch, actually both for Kyprolis and for Stivarga, not yet able to give you visibility on when we would have enough comfort to provide guidance.

As you heard throughout the course of this call, there are a number of variables that will affect growth trajectories for both products, and we would like to have more time under our belts to gain an increased level of confidence before we start to provide sales guidance on either of those products.

And then with regard to BD strategy, we are somewhat indifferent to Phase.

We have looked at very early stage things which obviously are more favorable to the P & L because they cost a little bit less before you have to invest significant dollars.

So, it's a nice way for us to hedge our bets and mature things.

We do survey the landscape for a variety of mechanisms that we think are the next generation mechanisms in cancer therapy and I think on that basis, we'll just stay very close to what's available.

Obviously, we've been successful with middle stage development opportunities such as Kyprolis, and we will continue to monitor the broad landscape.

Operator, we've got time for one more question and then I will close.

We have Matt Roden with UBS.

Great, guys.

Thanks for taking the questions, real quick.

First, Tony, earlier in the call you mentioned that the cardiac safety events as reflected in the label haven't really had much impact on the uptake of the drug, but I was wondering, coming from another angle, if you could comment on what you're seeing?

Realizing that it's still early, but anything you're seeing in the real world pharmaco vigilance in terms of cardiovascular events vis-a-vis rates talked about in the label and the clinical trial experience.

And then secondly, Barbara, in terms of front line development, with Kyprolis plan for 2013, can you just share with us, amplify maybe your current thinking on end points and whether or not we should be thinking about the potential for you to tease out superiority on any potential lines versus Velcade, maybe on CR rates or neurotoxicity.

Thanks a lot.

Okay, Barb, do you want to talk a little bit about our pharmaco vigilance experience?

The -- obviously the Company takes patient safety extremely seriously, and with that, all of the normal pharmaco vigilance surveillance mechanisms in place.

So we are monitoring this carefully, and at this stage, our estimates are that we're not seeing anything that seems out of the ordinary compared to what's in the label.

And then on front line, now Matt, we are going to have an analyst day coming up very shortly, and we'll be able to and have the experts inside the Company talk about our front line strategy.

I think we will be looking to demonstrate superiority wherever we possibly can.

The nice thing about our approach is the ENDEAVOR study is already up and running and the relapsed one to three prior therapies.

And then this front line strategy really should give us a broad landscape of our understanding of the potential for Kyprolis everywhere in myeloma.

The data about smoldering myeloma is going to be very interesting, so we're looking at that as well that Barb mentioned.

But stay tuned for analyst day.

We're looking for some coming attractions there.

I'm going to close by I think just saying that last year really was a remarkable year for Onyx.

We've got 26% increase in product related revenues compared to 2011.

We've got a great opportunity across the portfolio with putting some inhibitors, the kinase inhibitors, and now recently with Pablocyclable PD991 and the 8% royalty that we can expect, should that therapy come to market.

Helen has given you color on the market research and the commercial experience with Kyprolis in excess of a 30% patient share, 70% of physicians reinforcing the notion that they plan to increase their usage for Kyprolis.

We think these are all good indicators and part of a very important dashboard of the measures of success.

But the story is just beginning.

There are -- I think blockbuster therapies across two strong franchises, upside from our partnerships and the opportunity for us to generate multiple revenue streams.

So, this is something that is literally unfolding before our very eyes, and we appreciate your support.

Thank you for joining us today, and it's been a pleasure to work with you through 2012.

Operator, we're done.

Thank you, ladies and gentlemen.

This concludes Onyx Pharmaceuticals, Incorporated's conference call.

Thank you for participating.

You may now disconnect.