美國安進 (AMGN) 2013 Q1 法說會逐字稿

Welcome to the Onyx Pharmaceuticals First Quarter 2013 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.

You may begin.

Good afternoon.

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

Thank you for participating on our First Quarter 2013 financial results Conference Call.

Leading the call today 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 performance in our proteasome and kinase inhibitor franchises.

Next, Dr. Pablo Cagnoni, our new Executive Vice President of Global Research and Development and technical operations, will provide an update on our global clinical programs.

Finally, Matt Fust, Executive Vice President and Chief Financial Officer, will review our financial results.

We will then open the call to your questions.

Please note that 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 our 10-K for the year ended December 31, 2012, as well as to our other filings.

We expect to file our 10-Q for the First Quarter ended March 31, 2013 tomorrow.

During today's call we will be discussing Kyprolis (carfilzomib) for injection and Bayer's Stivarga (regorafenib) tablets.

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

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

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.

For additional information, please visit our website or follow us on Twitter at Onyxpharm or at www.Twitter.com/Onyxpharm.

I will now turn the call over to Tony.

Thanks, Amy.

Good afternoon, and as I begin, let me just take a moment to welcome Dr. Pablo Cagnoni, our newly-appointed Executive Vice President of Global R&D and Technical Operations.

As many of you know, Pablo has an established track record of success, and is known for his role in developing some of the most important cancer therapies available today.

The entire team and I are excited to have him leading the innovation of new medicines at Onyx.

Over the course of the last several months, Onyx has entered a new phase of growth as a company, a new era of global development and global commercialization.

Onyx has evolved into a diversified oncology company, with three approved therapies and five different cancer indications, with a substantial number of commercial, clinical and regulatory milestones that are expected in the months ahead.

Following a transformational period for the Company in 2012, we've now advanced to the next chapter of our story, one of top line growth and significant opportunity across our business.

In the first quarter of 2013, total revenues doubled to $145 million compared to the same period a year earlier, all driven by our increasingly broad portfolio.

Let's review some of our recent developments, beginning with Kyprolis, the first therapy from our proteasome inhibitor franchise.

We've executed a successful launch, generating net sales of $128 million since Kyprolis was approved in July of 2012.

And we're moving ahead quickly with plans for expansion, as we focus on broadening the reach of Kyprolis to potentially even more patients in the US and around the world.

To deliver on this goal, we're driving a comprehensive global development program across all lines of myeloma therapy.

The Phase III FOCUS trial has a planned interim analysis with results expected in the second half of this year.

This study would be expected to support registrations globally in the relapsed and refractory patient population, notably in Europe.

For relapse patients, the ASPIRE trial has a planned interim analysis that could occur as early as the fourth quarter this year, or later depending on event accrual.

As these trials progress, we're also preparing for the fastest possible path to approval for patients internationally.

We carefully analyzed the opportunity to help patients globally, and have determined the best approaches for various regions and countries around the world.

In the core countries, Onyx intends to go it a alone, marketing Kyprolis directly through affiliates or subsidiaries, while in other select markets we will work with local distributors.

As we did in the US, the pace for international expansion with our own affiliates will be judiciously guided by regulatory progress.

At the same time, we're moving rapidly to get Kyprolis to patients as quickly as possible.

And this includes an early access program that is just beginning in Europe, making Kyprolis available to appropriate patients in those markets.

Helen will describe the implementation of our global commercialization strategy in more detail in just a moment.

Behind Kyprolis, or in addition to Kyprolis, we're excited about our oprozomib, our oral proteasome inhibitor, and are advancing this development program with our new extended-release tablet formulation.

Pablo will highlight additional detail for this program in his comments.

Turning to the newest product launch, Bayer's Stivarga, the second major therapy in the kinase inhibitor franchise, the US launch in two indications now, both metastatic colorectal cancer and advanced GIST, has certainly been impressive.

Globally, momentum is building with approvals already secured in Japan, Switzerland, and Canada.

Additionally, Bayer is conducting a global development plan that includes two new Phase III trials, one already underway and another planned to start in the second half of this year.

Let me now turn to Nexavar, the foundational product for Onyx that helps patients in more than 100 countries globally and generates important cash flow for our business.

In addition to the advanced kidney and unresectable liver cancer approval that had been the cornerstone of its success, we now have the potential opportunity in thyroid cancer to further extend our patient reach.

And finally, in breast cancer, the Phase III RESILIENCE study completed enrollment in the first quarter, with top line results expected in the first half of next year.

In 2013, Kyprolis, Nexavar and Stivarga, each with potential for continued growth, are expected to drive top line momentum across our business.

The portfolio also includes an important economic interest in Pfizer's palbociclib, which yielded encouraging preliminary data in a randomized Phase II study, leading to a recent initiation of a Phase III trial by Pfizer.

We would like to congratulate Pfizer on their progress, and their recent FDA designation of palbociclib as one of the new breakthrough therapies.

Finally, we continue to evaluate assets in the oncology space to further augment our portfolio and position Onyx for continued top line growth as a global oncology leader.

And we continue to make significant strides in building our presence as a global organization committed to bringing important new therapies to cancer patients throughout the world.

Now let me turn the call over to Helen for a review of our commercial progress.

Thank you, Tony.

We entered 2013 with momentum, with the launches of Kyprolis and Stivarga driving a doubling of our total revenues in the first quarter compared to the same period last year.

Beginning with Kyprolis, we reported $64 million in net sales for the first quarter of 2013, including a favorable gross to net accrual adjustment of $6 million.

Demand sales were $58 million for the first quarter of 2013.

We continue to expect quarter-over-quarter demand growth throughout this year, driven by existing prescribers and expansion in the number of newly-adopting clinics and hospitals and new patient starts.

Importantly, and as expected, the continued adoption of Kyprolis and the entry of an additional therapy, are resulting in an expansion of the number of patients receiving novel agents in the third line plus setting.

Novel agent use grew from over 30% at the end of Q4 to greater than 40% at the end of Q1, with further expansion anticipated.

Kyprolis is already well established as a leading agent for the third line plus patient population.

At the end of Q1, approximately 2,100 unique accounts had ordered Kyprolis since launch, an increase of approximately 400 accounts from the 1,700 who had ordered at the end of Q4 2012.

This continued strong adoption trend, we believe, is a result of the physicians' response to the Kyprolis clinical profile and to the excellent breadth and coverage and time to reimbursement.

The number of new Kyprolis patient starts grew in the first quarter.

Kyprolis' share of this larger prevalent eligible third line patient population continued to grow.

In general, Kyprolis use has displaced re-treatment with prior regimens, including Velcade and Revlimid and also cytotoxics.

At this point in the launch, the mean duration of therapy hasn't been established, as a number of the patients who started Kyprolis shortly after approval still remain on therapy.

Turning to Europe, for the demographic support of multiple myeloma patient opportunity, similar in size to the United States, launch readiness preparations are well underway.

Recall our regulatory approval, which would be based on positive FOCUS or ASPIRE results.

We currently plan to market Kyprolis directly in about a dozen key European markets, establishing our own initial affiliates in France, Germany, Italy, Spain, and the United Kingdom.

In the remaining European markets, we will engage local companies to distribute Kyprolis to manage and limit our infrastructure costs.

In further support of our goal to have Kyprolis available for patients globally, our strategy in Latin America and Canada, Asia Pacific, and Middle East and Africa is to focus initially on those countries that accept a regulatory filing, or allow pre-approval access based on the current US approval and to engage local companies to distribute Kyprolis when authorized.

In the Latin American and Canada region, two agreements have now been signed, for Colombia and for Argentina.

We expect pre-registration access for patients in these two countries to begin via these local companies within the next few months.

In the Asia Pacific region, we have submitted regulatory applications for approval to health authorities in both Singapore and Thailand.

And finally, in the Middle East and Africa region, we communicated in March that we had signed our first agreement in Israel.

I'm pleased to announce that we have received orders and shipped product for that country.

Additionally, we have also now signed an agreement in Turkey.

This is indeed an exciting and very busy time as we bring Kyprolis to patients globally.

Turning now to our kinase inhibitor franchise, Bayer reported Stivarga net sales of $53 million in the first quarter of 2013, off which Onyx recorded $9 million as royalty revenue.

Global net sales for Nexavar, excluding Japan, were $199 million, resulting in collaboration revenue of $70 million to Onyx.

Beginning with Stivarga, the US launches in third line plus metastatic colorectal cancer and in third line GIST are progressing well.

Our broad base of approximately 3,000 physicians has prescribed Stivarga at least once since launch, with approximately 1,000 new prescribers in the first quarter.

The patient opportunity for Stivarga in metastatic colorectal cancer is 20,000 to 30,000 patients annually in the United States, and for third line GIST, an estimated 1,000 to 1,500 patients are eligible to receive Stivarga based on the US label.

With the launch success in the US, and current and projected global approvals anticipated in 2013, Stivarga is well on its way to becoming an important medicine across its approved indication.

Turning now to Nexavar.

Net sales for the first quarter declined, principally in the United States and Europe.

In the US, the decline was mainly due to inventory reductions, as we evolved our distribution approach, streamlining the number of specialty pharmacies.

As expected, this was partially offset by continued double digit growth in Asia Pacific region and continued improvement in commercial margin.

As we look forward, we expect growth in the United States as well as continued growth in the emerging markets, while new potential indications present further opportunities for Nexavar.

Beyond the currently-approved indications, recent progress has been made with thyroid and breast cancer registration enabling studies, as Pablo will describe next.

2013 will be an important year for the Onyx commercial team as we execute our plans to grow both our proteasome inhibitor and our kinase inhibitor franchises domestically and internationally.

Let me now turn the call over to Pablo.

Thank you, Helen.

Let me start by saying that I'm very excited to join Onyx in this pivotal point in the Company's development.

As a rapidly-emerging biopharmaceutical leader, we have in place a thoughtful development program and a solid commercial presence in oncology, designed to extend our global reach.

Beginning with the proteasome inhibitor franchise, our objective is to establish a broad label for Kyprolis as a treatment for patients with myeloma across all lines of therapy.

The FOCUS trial is in relapsed and refractory multiple myeloma patients who have progressed up to three or more therapies.

Patients in the study are randomized to receive either Kyprolis monotherapy or best supportive care, which includes steroids and optional cyclophosphamide.

This trial, which was an active comparator arm, was designed to demonstrate the survival improvement, and we expect to complete a planned interim analysis in the second half of this year.

If the interim study results are positive, we are planning regulatory submissions with the EMA and globally.

ASPIRE, the trial in relapsed patients who have received one to three prior therapies, has a planned interim analysis as well.

We continue to expect data as early as the fourth quarter this year, or later depending on the rate of event accrual.

The ENDEAVOR study, also in relapsed patients, provides an opportunity to assess the superiority of Kyprolis over Velcade.

In addition to evaluating a higher dose of Kyprolis at 20 and 56 milligrams per meter squared, this study is looking at a two-drug combination of a proteasome inhibitor and dexamethasone.

Moving earlier in the treatment paradigm, our strategy for newly diagnosed patients, or transplant ineligible, includes a registration enabling trial known as CLARION to support submission globally.

This head-to-head study is designed to assess superiority over Velcade in the front line setting.

It includes a melphalan/prednisone backbone and will evaluate PFS as a primary endpoint.

As you know, VMP is a global regulatory standard for transplant ineligible patients, which was a key factor in our selection of the comparator for this trial.

Our overarching objective is to establish an indication for Kyprolis that allows for broad use in multiple myeloma patients around the world.

Additionally, a set of complementary studies to assess Kyprolis in multiple combination regimens across all lines of therapy are already under way.

Switching to our oral inhibitor, oprozomib, new data was reported in April from a Phase Ib/II study.

Although preliminary, and from a small number of patients, results following the use of the once-daily extended-release tablet suggests a trend toward better tolerability.

Dose-dependent proteasome inhibition was observed, with 80% inhibition at the highest dose tested, and we are continuing dose escalation until we reach the maximum tolerated dose.

Given the preliminary data showing promising clinical activity, we have selected this tablet formulation as the formulation for further development, and are moving ahead with this molecule in the clinic.

We look forward to sharing updated data from the ongoing Phase 1b/2 dose escalation study in June at the European Hematology Association, or EHA, Congress.

For the kinase inhibitor franchise, Bayer is executing a development program for Stivarga to support approvals globally with two Phase III trials in 2013, one already initiated and one planned to start in the second half of this year.

The first is evaluating Stivarga in second line liver cancer patient after progression of Nexavar, and the second will be conducted in patients with colorectal cancer, following resection of liver metastasis.

Both studies are designed to test Stivarga versus placebo.

Turning our attention to Nexavar, there were two important developments in the first quarter.

First, we reported positive top line data from the Phase III decision study in patients with thyroid cancer.

The data from this trial will be presented at the Plenary session at ASCO early next month, and an SNDA filing is now planned for midyear in the US, with additional submissions globally thereafter.

Second, in March, we completed patient enrollment for the RESILIENCE study in HER2 negative advanced breast cancer.

This Phase III trial is evaluating capecitabine with Nexavar or placebo, and the primary endpoint is PFS.

We expect to report results from this registration enabling trial in the first half of 2014.

With multiple Phase III trials advancing, we look forward to a number of important clinical and regulatory milestones in the months ahead, and the potential to reach even more cancer patients with our therapies.

I will now turn the call over to Matt.

Thank you, Pablo.

Our first quarter results demonstrate the increasingly diversified revenue stream as generated by our portfolio of medicines, driving top line growth and enabling strategic investments in Kyprolis and oprozomib.

First quarter revenue of $145 million was more than double the $72 million reported in first quarter 2012.

Kyprolis net sales in first quarter 2013 were $64 million, and included a $6 million favorable gross to net adjustment in the quarter, reflecting updated assumptions for product replacement reserves.

For full year 2013, we now expect gross to net sales adjustment to be between 10% and 15%, with continued quarter-to-quarter variability.

Approximately $9 million in Kyprolis gross deferred revenue was carried on the balance sheet at quarter end.

Gross margin on Kyprolis net sales was 97% for first quarter 2013, as we continue to sell the lower cost inventory which was expensed prior to launch.

We expect gross margin on Kyprolis net sales to average approximately 90% for full year 2013.

Turning to Nexavar, collaboration revenue for first quarter 2013 was $70 million, with a commercial margin of 67%.

For Stivarga, Bayer reported $53 million in first quarter net sales, which resulted in $9 million of royalty revenue to Onyx, based on worldwide sales and jurisdictions where Stivarga is approved and commercially available.

Our first quarter revenue also included a $2 million milestone payment triggered by Pfizer's initiation of a Phase III palbociclib trial in patients with ER positive, HER2 negative advanced breast cancer.

Under our agreement, Onyx is eligible to receive up to an additional $9.5 million in milestone revenue and an 8% royalty on potential future global net sales.

Non-GAAP net R&D expense was $89 million in first quarter, comprised primarily of Kyprolis development expenses, including the fully enrolled FOCUS and ASPIRE trials, the actively-enrolling ENDEAVOR study, and preparation for patient enrollment in CLARION.

Non-GAAP SG&A expense was $66 million in first quarter, driven primarily by Kyprolis US commercial expense.

Finally, we ended first quarter with $739 million in cash and investments.

With a first quarter performance that included increasingly diversified top line revenue growth drivers, continued strong delivery by the US commercial organization, and advances in the Kyprolis and oprozomib development programs, we are maintaining the 2013 financial guidance provided on our financial results call in February.

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

Thanks, Matt.

This has really been an exciting and an important quarter, with some terrific sales and revenue performance, as we continue to deliver on our commitment to build a business with multiple growing revenue streams, which allow investments in our next phase of products and our business expansion.

Looking ahead, we are looking forward to momentum across the portfolio, with continued top line revenue growth, as well as several upcoming commercial regulatory and clinical milestones, notably and including the following.

First, progressing the commercial launch of Kyprolis through continued demand growth for Kyprolis in the US and as a result of building and expanding our international access and global capabilities.

Second, advancing the global registration enabling development program for Kyprolis across all lines of treatment, with interim data possible this year from FOCUS and potentially ASPIRE.

Third, advancing the new oprozomib tablet formulation for further development, now that we have finally selected a formulation for full development.

Fourth, reporting Nexavar data in thyroid cancer at ASCO and expanding Nexavar's reach with global filings.

Fifth, sharing Bayer's progress with global commercial, regulatory and clinical progress for Stivarga.

And finally, continuing to evaluate assets that provide opportunities for us to not only sustain our long term and meaningful growth, but expand our pipeline.

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

(Operator Instructions)

Matt Roden, UBS.

Congrats on the progress here.

Thank you, Matt.

So Helen, you characterized the growth here as based on market growth, market expansion, and share growth in the relapse setting, and I realize it is very early here.

But the feedback we've heard from the field is that there is interest in the KRD combination regimen up front consistent with the NCCN treatment guidelines.

So I'm just wondering if there's anything you can share anecdotally or in aggregated data that would tell us whether or not that started to impact the sales line at this point?

Yes, first and importantly, I have to make the comment that the NCCN guidelines don't expand our FDA approved label, and clearly Onyx is promoting Kyprolis as purely on the label.

While we do hear anecdotes of KRD in first line, it is very rare.

The majority of Kyprolis continues to be used on label, so I think a few academic centers may be doing that, but infrequent at this time.

Okay, very good.

Operator, we'll take the next question.

Cory Kasimov, JP Morgan.

Helen, I'm interested in your -- the feedback that you provided, since the introduction of Pomalyst in the first quarter, it seems like both Pom and Kyprolis had very strong -- both had very strong starts to the year.

So you provided some numbers around the growth in novel agents and spoke qualitatively around that as well.

But do you think that the performance that these drugs have had for it to begin in 2013 is enough to dismiss the concerns that were out there that you were going to have some near term competitive issues from a commercial standpoint, and we've moved on from that at this time?

Corey, I know Helen will have a point of view, but let me offer just a little bit of context.

I think that we have said all along that the market -- we expected the market for use of novel agents to expand as we're moving into the period where Pomalyst was added to the therapeutic choices.

So we are not surprised at all that the number of patients receiving novel therapies is going up.

We have also long held a view that physicians are really as interested in the potential combination of Kyprolis and Pomalidomide or proteasome inhibitor and an IMiD across all lines of therapy, well established in the front line, as you know, and even the relapsed setting.

We've reported some data in previous meetings on this potential combination, and we expect that this could continue to be a source of interest for a number of physicians.

So so far it appears to be a fair bit of room for both therapies, and we are really quite pleased with the continued performance of the Kyprolis launch, but Helen is going to give you more color, I'm sure.

Yes, Cory, just to talk about where we're seeing Kyprolis being used, and it really is, as you know, in the larger third line population is where we're seeing most of it.

And it's displacing re-treatment with Velcade and with Revlimid and with cytotoxic agents.

And so while the combination of Kyprolis and now Pomalyst coming to that market has changed some of that dynamic, there remains, still, patient opportunity, and we do predict a continued expansion in the number of patients available for treatment.

Then it comes down to the Kyprolis profile, and we've said before, and our research continues to show, that Kyprolis, as physicians tell us, is meeting their needs for these patients, so we continue to project that we will see quarter-on-quarter demand growth.

Good.

Thank you, Helen.

Next question, Operator?

Phil Nadeau, Cowen & Co.

Just two to follow up on that Pomalyst launch.

I believe Celgene on its earnings call discussed the order it was seeing use, suggesting today that it's Kyprolis third and then Pomalyst fourth.

Are you seeing same thing, and do you expect a change in that?

And then second, I was wondering if you'd be willing to give us any idea of how new patient adds for Kyprolis have changed month over month in February, March and April?

Okay.

Helen?

Yes.

In terms of where we're seeing Pomalyst being used, it is being predominantly, at this time, sequenced after Kyprolis.

So Kyprolis in third line and Pomalyst seeing its largest share occurring in the fourth line population.

With regard to new patient adds, that isn't information we've been providing or updating, so at this time I'm not able to provide that information.

Okay, very good.

Next question, Operator?

Rachel McMinn, Bank of America Merill Lynch.

Yes, I was wanting to get a little bit more comments from you, Tony.

I was interested, you've emphasized a couple of times in the call about this full formulation for oprozomib.

Can you comment on when you expect the possibility of a Phase 3 start?

I know there's still some dosing work that you're doing, and it's early.

And then secondly, just on duration, you made a comment about mean duration is just impossible to tell right now.

But it seems like, based on what you're saying, that it should be over four months as patients -- you got a big bolus of patients in September following the launch, and you still have quite a fair number of patients still on therapy, that hat bodes very well for duration.

Sure.

I'm actually going to ask Pablo to take the oprozomib question.

Pablo?

Thank you, Tony.

So I think it's important -- the first point to make is that we're very happy to have made a decision to move forward with the new tablet formulation.

The patient -- the number of patients that we reported data in Q2 is relatively small, and it's early, but we're very encouraged by the very good safety profile that we're observing with the new tablet formulation.

Based on that, we made a decision that this is going to be the formulation of oprozomib to move forward in further development.

As a result of that, over the next several months, we'll be initiating combination trials of oprozomib with other agents in multiple myeloma, and we look forward to keeping you updated on the progress of the oprozomib program.

And Rachel, as I'm sure you and everyone else knows, that on clinicaltrials.gov, there's already a listing for the oprozomib/dexamethasone study in relaxed refractory patients, so we are beginning the Phase 2 program in earnest.

Too early to guide on a Phase 3 start, but we really do like this new formulation and we're ready to drive forward with it.

And Helen, then on the mean duration of treatment question.

Yes, Rachel, I would just repeat that we do think it's still too early to know the mean duration of therapy.

We're looking at different cohorts of patients in our chart audits and looking to build a robust answer for you, so premature to comment at this time.

Good, thank you.

Okay.

Operator, we'll take the next question.

Chris Raymond, Robert W. Baird.

Just a question on the ASP change to -- from ASP plus 6 to ASP plus 4. I think it was back in March you guys talked about this as a potential headwind.

You've now got a little over a month in the rear view mirror of this experience.

Can you maybe talk about whether -- is it as big a deal as you thought it was, or worse?

Give us some perspective.

Yes, I think Chris, what I'd probably say is, obviously we're watching everything that's happening with the sequester very carefully, and this was, as everyone knows, a direct result of sequestration which went into effect in late March or early April.

It's probably very early, too early for us to tell.

I think we're still encouraged by the number of new patient starts that you heard Helen mention a moment ago.

And of course, we are following events in Washington really carefully.

But Helen, any color specifically on Kyprolis?

Yes, just one of the things we were tracking was what we're hearing from our oncology physicians, and to date, while I think there was a lot of discussion about sequestration, we have not seen any acceleration on how they're treating patients, where they're treating patients.

So certainly to date, no impact on how we're seeing Kyprolis being used.

Good.

I think it's fair to say, just to finalize our comment, docs are going to choose the best therapy for their patients, and so whether they are administered in the office setting or in the hospital setting, we still think that the virtues of Kyprolis will speak for themselves.

Operator, we'll take the next question.

Howard Liang, Leerink Swann & Company.

Can you update us on the STORM trial, whether we're still expecting data second half of 2014?

No, I think because that's an Adjuvant study, we're going to not make any updates specifically on timing for data.

The enrollment did finish some time ago and, as you know, these Adjuvant trials can take awhile, but certainly to hit all of the relevant events.

So no further guidance on STORM at this time, but we're obviously very excited about the FDA opportunity for thyroid, and we'll be following that very closely for Nexavar, as well as what could be coming up in the RESILIENCE study in breast cancer as well.

That's made very nice progress, enrollment is done, and we're just now waiting for the rest of the events to accrue.

So it could be possible that we'll have data from STORM in the second half of 2014, and we'll obviously watch that very, very carefully.

Operator, next question?

We have Michael King, JMP Securities.

Mike, are you there?

Hello, can you hear me?

Yes, now that's better.

This is Carter on for Mike.

First of all congrats on all of the progress.

My question is, (laughter) can you offer any color on the doses being used in the field, specifically if oncologists are pushing doses higher or using longer infusion times?

And the second question is for Matt.

If the commercial margin seen with Nexavar for the quarter are a new run rate, that's what we should expect going forward?

I'm going to assume for a moment you mean doses for Kyprolis, just to clarify.

Yes, excuse me.

Yes.

Okay, good.

Helen will take that one, and Matt on the commercial margin.

As we previously commented, we're continuing to see the majority of Kyprolis use is on label, not just in terms of the patient population, but also with the dosing.

So 20/27 is by far the most commonly used regimen.

(inaudible)

And Carter, this is Matt.

On the Nexavar commercial margin, we did report a 67% commercial margin on Nexavar in the first quarter.

I will remind you that our full year guidance, which we are not changing at this juncture, is for commercial margin in the range of 62% to 64%, so although we're off to a good start on the year, we'll stick with that 62% to 64% guidance for the full year.

All right.

Next question, Operator?

Biren Amin, Jefferies.

I think you mentioned on the call earlier that oprozomib continues on track with the dose escalation phase and that you haven't reached MTD, so just trying to understand how far above you've gone from the 210 milligram dose that was reported in -- at IMW in Kyoto.

Okay, Pablo?

Yes, so as I mentioned, that's still an ongoing study.

We are going to present updated results at the European Hematology Association meeting in Stockholm next month, so I'm afraid you're going to have to wait until that meeting so we can discuss the results at that time.

Very good.

Good news is that we don't have an MTD.

Correct.

And we are advancing the Phase 2 program, so that's very good.

Next question, Operator?

Geoffrey Porges, Sanford Bernstein.

Congratulations on the results and the quarter.

Helen's flavor of the month today, so I'll follow up with other questions for Helen.

Quickly, was there any revenue to any of the distributors in the reported results and/or main patient basis to Europe?

And if not, presumably, when would you anticipate that revenue starting to occur?

And then could you give us a little more color?

You mentioned very little was mostly used for Kyprolis was third line, but was there any use in second line patients who have already failed two drugs?

And related to that, could you give us some color on the mix of combination versus monotherapy, or at least straight steroid combination use for Kyprolis?

Okay, Geoff, I'm going to actually ask Helen to address the first couple of questions, and then ask Matt to make a comment on the expectation for revenues from some of the international programs, so Helen?

Yes, Geoff, let me start with the -- what we're seeing in on label second line use.

It really was pretty stable in the first quarter as compared to the fourth quarter last year, at the low single digit percentages, so the majority of our use is indeed in the third and fourth line patients.

And then your second question, Geoff, was -- the mix of combination.

Again, as I mentioned, the majority of the uses is on label.

We do see some use with dexamethasone, and occasional use with Revlimid as we talked about a few moments ago.

But the majority of uses is single agent, on label, in the third and fourth line population.

Okay, good, and then Matt?

Sure, so with regard to Kyprolis net sales in the first quarter, the overwhelming majority of the net sales we reported are US sales from the US commercial organization.

We're very excited about the ability to begin to bring Kyprolis to patients in other countries, but those will initially be, for the most part, countries which are referencing the US label.

So we'll be in a similar population and, as you heard us begin to discuss, some of the countries will be, we suspect, not a significant impact on Kyprolis sales here in 2013.

Okay.

Very good.

Operator, we will take the next question.

Ryan Martins, Lazard Capital Markets.

Congrats on the quarter.

Start out with on oprozomib.

You've said you have selected the -- you have decided to move forward with the new formulation.

Have you decided what schedule you're going to use, or are you waiting for the final data to be presented at EHA?

And then I have a follow-up, which is I guess related to the previous question on duration for Kyprolis.

I know, Helen, you said the majority of patients are staying on the drug.

Do you have an idea of what the discontinuation rate has been?

So I think on oprozomib, it's -- we don't have the final dosing schedule.

Know that we are doing a phase 1b/2 work concurrent with beginning with the Phase 2 program, so stay tuned for what the final schedule will be there.

And then on the DOT, the duration of treatment question?

Right.

Just to mention that I said a number of patients were staying on therapy, and as part of the way we're calculating what the mean duration of therapy, we obviously are looking at cohorts to anticipate and calculate what the discontinuation rate is.

So that is data that is also maturing, so we're not in a position to give a specific answer at this point in time, but we are continuing to evaluate that.

Good.

All right, Operator, next question.

Salveen Richter, Canaccord Genuity.

Just one, really, on BD activities.

As you look to potentially in license products, what disease areas and criteria are you looking for here?

Yes, I think we've been very clear, and also very consistent in saying that we want to stay focused in the hematology and the oncology spaces.

That seems to work very well for where our strength is, where our areas of expertise are, and the capabilities we've built in the organization.

So we understand a lot about the new targets and the new mechanisms that are emerging in this space.

So in this one, we want to play to our strengths.

We will, as you pointed out, continue to think about in licensing arrangements, options, acquisitions and the full gamut within the hematology and the oncology space.

Next question, Operator?

Gene Mack, Brean Capital.

Please go ahead.

Your line is open.

All right, we'll go back to the queue, Operator.

Who is next?

Terence Flynn, Goldman Sachs.

First, can you just remind us about the 006 data that we're going to be seeing at ASCO?

And the key differences between the ASPIRE trial that's ongoing, just to make sure everyone's expectations are set appropriately there?

And then on oprozomib, was just wondering, now that you have the formulation locked down, can you comment if you're going to owe any third party royalties on that?

Yes, none on oprozomib.

That's wholly proprietarily-owned when we purchased Proteolix, so there will be no outstanding royalties there.

So that's actually quite good for the ultimate economics.

And then Pablo, on the comparison between 006 and ASPIRE?

There are updated results of 006 will be provided at EHA and at ASCO and we will present the PFS for that study.

I think the main difference between 006 and ASPIRE that we have to keep in mind is the inclusion of lenalidomide refractory patient in 006.

And those patients will be excluded from the ASPIRE trial, so I think that we need to be careful about extracting any conclusions from 006 that could apply to ASPIRE, the different trials with different designs.

Right, so more heavily pre-treated population, you would say, for 006?

Yes.

Okay, good.

All right, Operator, next question?

Gene Mack, Brean Capital.

Just a quick question on the current formulation of Kyprolis.

Are you -- and I apologize if you already went through this, and you're staying on the call late.

But are you working on any other formulations, any other injectable formulation of carfilzomib?

And can you just talk a little bit about that if you are?

Yes.

What I can tell you, and we did talk a little bit about this at Analyst Day, is that we do have some data for Kyprolis with alternative formulations that will increase the pharmacokinetic profile or extend the pharmacokinetic profile for Kyprolis, which we think actually makes a difference, not only in the degree of proteasome inhibition but also in tumor cell killing activity.

We don't have a large program that's looking at an alternative formulation for Kyprolis, but are taking these pre-clinical findings and trying, to the best of our ability, translate them potentially to what this could mean for oprozomib, as an example.

So we will, in addition to that, also keep thinking about back up programs for oprozomib, which Chris Kirk talked about at Analyst Day as well.

Next question, Operator?

Ying Huang, Barclays.

I guess I have one for Matt.

That is, you guys --sorry -- had a pretty large favorable adjustment on the gross to net, $5.9 million last quarter.

Can you elaborate a little bit why?

And then, what should we assume going forward for 2013 for gross to net adjustment here?

Sure, so just setting a bit of context, recall that, when we report Kyprolis sales each quarter, we actually take the gross sales, which we make to our customer.

And then make a set of adjustments for various reserves including chargebacks, rebates, potential product returns and replacements, to derive the net sales number which we report to you each quarter.

In the first quarter 2013, as you noted, the Kyprolis net sales number reflects a roughly $6 million favorable adjustment which reflects an update in our assumptions about a launch related product replacement program.

We do expect this will be the only accrual adjustment that we make related to this particular program.

And so as a result for the full year 2013, we now expect the gross to net sales adjustment will be in the range of between 10% and 15%.

Still some possibility for quarter to quarter variability, but a 10% to 15% range, we think, is a good estimate for the full year.

Okay.

Operator, I think we've got time for just two more questions.

We'll take the last two.

Echo He, Maxim Group.

The first one about the capture rate of the database, and seemingly like the last quarter, the capture rate went down a little bit.

Why was that?

And also, should that be considered in the future?

We should consider that around 60% of capture rate?

And the second is about R&D.

There are many trials, especially Phase 3 trials, are ongoing and about to start.

Should we think about this year, the R&D expenses should peak in terms of absolutely spending levels, or we should consider that next year the R&D expense is going to be even higher?

Okay, very good.

I think, Helen, if you could talk a little bit about the data capture rate from the various audits and surveys that are out there, presumably this is for Kyprolis as well, so we will just give Echo our thoughts.

Yes, on the Wolters Kluwer capture rate for Kyprolis, we certainly do see week to week variability, and we do project that's going to continue to change.

I think for Stivarga, just a word on that.

Because we distribute Stivarga through specialty pharmacy, the data reported is certainly incomplete, and we've seen a lot of variability in that, so while I know you watch that information, and we just want to say that it will change from week to week, be different amounts and interpret with caution.

Good, and then Matt, on the Phase 3 trial and the R&D spending?

Sure, so maybe a little bit of context around the R&D spend and our assumptions there.

As you noted, the key driver for Research and Development expense in this period of time is investment behind unlocking the full value of Kyprolis with the four Phase 3 trials, which you heard Pablo discuss in today's call.

Within that set of trials, the ASPIRE and FOCUS trials are fully enrolled, and so expenses are ramping down at the same time that expenses for the ENDEAVOR trial are ramping up as enrollment proceeds with that trial and the anticipated rapid advancement of the front line trial, as you heard discussed today.

Also against that backdrop, keep in mind that we have given guidance that we expect the investment in Nexavar Research and Development expense to trend downward again in 2013, as some of the key Nexavar programs come to fruition.

But I think at a top line level, you need to expect us to make prudent but important investment decisions, particularly behind Kyprolis and oprozomib.

And although we haven't given guidance beyond 2013, we do remain comfortable with the 2013 non-GAAP R&D expense guidance we provided on the call in February, in the range of $400 million to $450 million for the year.

Okay, Operator, we'll take the final question and then we'll close.

Jim Birchenough, BMO Capital Markets.

Just a couple.

One, just on pre-registration sales ex-US.

Could you let us know how you're pricing Kyprolis in those territories?

And then just one to follow-up on -- a bit on some prior questions regarding second line use.

What we've heard is, with VRD as a standard of care front line, when patients get an inadequate response, they are not really going to respond to a second line doublet, and second line KRD would be in label.

So just trying to get a sense of why you're not seeing more second line KRDs, or is there some trend where you're starting to pick that up?

Okay, Jim, on your first one, in terms of the pre-registration access programs, I think you were inquiring about pricing.

Helen?

In terms of pricing, it certainly is at, or close to, the US level, is what we are making the product available to distributors at.

And thereafter, they make their own decisions, or after that.

In terms of the second line use, we certainly are not actively promoting the combination of KRD in second line use, although we are seeing some use of it.

And yes, I think in terms of physicians, reticence to use it to date is perhaps concerned with regard to reimbursement, and other factors like that.

Our focus is making sure physicians understand the appropriate use of Kyprolis according to our label, and really the majority of patients are in the third and fourth line.

Okay, very good.

Okay.

This has been a -- really, a terrific quarter for us.

Sales have been strong, double on the top line, with great continued quarter-over-quarter growth for Kyprolis, good progress with Stivarga, and with Nexavar as well.

Really, firing on all cylinders across the business.

So we are excited about what's happening at Onyx.

We're clearly committed to the focus on patients.

We've got the team, we've got the runway, we've got the assets, and look forward to bringing you additional updates.

I suspect the next time we'll see everyone is at ASCO, at the plenary session for our thyroid, where the full data results will be presented that we expect will enable the SNDA for Nexavar later this year.

So its been terrific so far, and just stay tuned.

The year has got a lot more time left in it for additional progress.

Thanks for joining us today.

Thank you, Ladies and Gentlemen.

This concludes Onyx Pharmaceuticals First Quarter 2013 Conference Call.

Thank you for participating.

You may now disconnect.