Amgen Buyout Reportedly Near as Onyx Pharma Sales Double in Q2

Andrew Klips  |

San Francisco drugmaker Onyx Pharmaceuticals, Inc. (ONXX) reported second-quarter results after Thursday’s closing bell that showed a stark increase in revenue and contraction in net loss that narrowly beat analyst expectations. The earnings release was followed by another piece of press saying that the company has struck a deal related to its drug carfilzomib.  The news could add some pressure to Amgen, Inc. (AMGN) to try and seal the deal to acquire Onyx.

For the quarter ended June 30, Onyx reported total revenue of $153.03 million, marking a 110-percent increase compared to $72.70 million in the second quarter of 2012.  On a GAAP basis, the company posted a net loss of $53.17 million, or 73 cents per share, versus a net loss of $106.05 million, or $1.65 per share, in the year prior period.  On an adjusted basis, which excludes the impact of non-recurring items, the net loss was $29.04 million, or 40 cents per share, compared to a net loss of $43.57 million, or 68 cents per share, in Q2 2012.

Analysts were calling for an adjusted net loss of 42 cents per share on revenue of $152 million.  Analyst typically do not factor-in special items.

Revenue from Nexavar, an oral treatment for patients with unresectable hepatocellular carcinoma that was co-developed with Bayer (BAYRY) , rose to $81.8 million in the second quarter, compared to $72.7 million a year earlier.

Sales of multiple myeloma drug Kyprolis were $61.0 million (down modestly from $64 million in the prior quarter) with another $10 million in revenue deferred for inventory of the drug at distributors that have not yet gone to doctors and hospitals.  Analysts expect Kyprolis to become a blockbuster with sales in excess of one quarter billion dollars this year and over $1 billion in 2016.  The drug was approved by the FDA in June 2012 and is protected under patent until 2015, adding quite a bit of flavor to Onyx for some bigger pharmas that have been hit hard by the patent cliff.

Revenue from Stivarga, a colorectal cancer therapeutic that was developed by Bayer, was $10.2 million.  Onyx gets a 20-percent cut on global net sales of the drug.

Tapping into profits, total operating expenses rose from $178.5 million to $200.6 million.  Rising costs for research and development and selling, general and administrative expenses were offset somewhat by a reduction in contingent consideration costs.

"Accelerating revenue from each of our products, coupled with strategic investment to unlock the value of Kyprolis, provides a compelling platform for the current and future growth of Onyx.  With our Phase 3 program for Kyprolis across all lines of multiple myeloma therapy, we are committed to expanding the label globally, and we have a clear strategy to enable a filing in Europe in the second half of 2014, pending positive results from both ASPIRE and FOCUS,” said Tony Coles, M.D., chairman and chief executive officer of Onyx.

Onyx has been the subject of speculation about buy-out offers for quite some time because of the robust nature of potential sales streams.  In June, Thousand Oaks, California-based Amgen offered $120 per share to buy Onyx, sending shares above the buyout price as investors thought a better offer may be in the making.  The offer, which was well above Onyx’s price of $87 at the time, has kept other possible bidders on the sidelines.  This week, Reuters and Bloomberg have both published articles reporting that persons familiar to the matter say that the deal is near being done at $130 per share, making the total transaction about $9.5 billion.

The earnings report was devoid of any discussion of a potential acquisition by Amgen.

Separately, Onyx announced that it is partnering with Idis Limited to initiate a Managed Access Program for carfilzomib in certain countries in Europe for the treatment of patients with multiple myeloma previously treated by other specific drugs and are showing disease progression within two months of completing treatment of those drugs.

Shares of ONXX closed Thursday trading down by 0.6 percent at $127.42, but have reversed course back up to $129.00 in extended trading following the news releases.  In 2013, shares have risen nearly 70 percent.

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