OBTN's’s Physician’s Financial News section focuses on a news-making and/or notable company in the oncology biotechnology sector. Typically, the featured concern will boast a sizable portfolio of oncology products and product candidates, including numerous FDA-approved agents on the market and an additional complement of compounds in the development pipeline.

This month’s featured company, Emeryville, California–based Onyx Pharmaceuticals, Inc., however, has taken a different strategic approach toward competing in the sector. Although the Onyx research and development (R&D) department is continually pursuing new therapies—in fact, a novel experimental drug, discovered and developed inhouse, has just entered early-stage clinical trials (more on this agent to follow)—the company has recognized that its lead product, Nexavar (sorafenib), is a multifaceted therapy with a number of potential applications in a wide-ranging variety of cancers. Therefore, the bulk of Onyx’s R&D efforts center upon expanding Nexavar’s potential to the fullest and most complete extent possible.

This month’s feature, then, in addition to fulfilling its regular function as corporate profile, also serves as a sort of experimental industry case study on alternative, unorthodox market strategy. How does the performance of a company (i.e., in terms of financials, industry position, future prospects, etc.) that chooses a narrow, targeted R&D focus designed to fully reap the benefits of one particularly fertile agent compare with competitors who have adopted more traditional approaches? The answer, insofar as it can be determined in the sections that follow (pipeline prospects, financial performance, sales, etc.) is: surprisingly well.

Products and Pipeline
The purpose of Onyx Pharmaceuticals, founded in 1992, according to a statement published on its website, is to engage in the discovery, development, distribution, and marketing of “innovative small molecule cancer treatments based on a molecular understanding of cancer.”

Onyx’s lead product is Nexavar, an agent that is being developed and marketed in collaboration with Bayer HealthCare Pharmaceuticals. The orally delivered (tablet formulation) multiplekinase inhibitor targets proteins involved in both tumor cell proliferation and angiogenesis. In preclinical studies, Nexavar has been shown to inhibit the enzyme RAF kinase, which is a critical component of the RAS pathway—an important cascade of chemical signals that controls cell division. Abnormal activation of the RAS pathway is believed to play an integral role in the genesis of many cancers. Additionally, Nexavar inhibits VEGFR-2 and PDGFR-ß, key receptors of vascular endothelial growth factor (VEGF) and platelet-derived growth factor (PDGF), which play important roles in angiogenesis. Nexavar also inhibits other tyrosine kinases such as c-KIT and FLT-3.

To date, Nexavar is approved in more than 60 countries (including the European Union) for the treatment of patients with advanced kidney cancer. The drug has been an FDA-sanctioned kidney cancer therapy since December 2005. Nexavar's approval in the United Stated followed a report at the 2005 annual meeting of the American Society of Clinical Oncology (ASCO), demonstrating that Nexavar was generally well tolerated and significantly delayed disease progression in an ongoing phase III clinical trial in patients with advanced kidney cancer. As assessed by independent radiologic review, progression-free survival (PFS) was doubled to a median value of 24 weeks (167 days) in patients receiving Nexavar, compared with 12 weeks (84 days) for patients receiving placebo.

More recently (in November of last year), Nexavar gained a second indication to treat liver cancer in the United States and (shortly thereafter,) the E.U. The approvals were based on positive data from the international, phase III, placebocontrolled Sorafenib HCC Assessment Randomized Protocol (SHARP) trial, which demonstrated that Nexavar extended overall survival in patients with hepatocellular cancer (HCC), or primary liver cancer, versus those taking placebo by 44%. Presented at the ASCO annual meeting, Chicago, in June 2007, these data showed that median overall survival for Nexavar-treated patients was 10.7 months, compared with 7.9 months in those taking placebo.

According to an Onyx spokesperson, the oral anticancer drug is the first approved systemic therapy for liver cancer and the only one on the market that has been shown to significantly improve overall survival in patients with the disease. In comments made shortly after the liver indication was obtained, Hollings C. Renton, outgoing chairman, president and chief executive officer, Onyx Pharmaceuticals, Inc. (Mr. Renton is set to retire as of April 2008. N. Anthony Coles, MD, is his replacement.), stated, “Liver cancer is one of the cancers in which the number of related deaths continues to increase. This second approval for Nexavar demonstrates our commitment to expediting the clinical development of this innovative therapy to treat today's unmet needs in cancer."

As part of a broad development program, Nexavar is also currently being evaluated in randomized trials in non–small cell lung cancer, breast cancer, melanoma, and many other tumor types. Onyx also has a second product in clinical testing, a small molecule cell cycle inhibitor that resulted from a collaboration with Warner Lambert, a Pfizer subsidiary.

Although Onyx’s development pipeline may not be as deep as those of its competitors (in terms of number of current agents segmented into trial phases, working their way toward market), it is extremely wide ( as far as the number of potential new and expanded indications that are being evaluated).

Currently, there are 17 separate ongoing clinical trials (in all phases) assessing the efficacy and safety of the company’s major product, Nexavar, both as monotherapy and as a component of various novel combinations and formulations, in a diverse array of new and expanded indications for multiple types of treatment scenarios, disease stages, degrees of severity, and malignancies, including liver cancer (two trials), kidney cancer (four trials), non–small cell lung cancer (four trials), melanoma (two trials), and breast cancer (five trials).

In addition, the company is nearing the end of phase I testing and preparing to transition into phase II analysis of PD 332991, a cell cycle kinase inhibitor (also known as a cyclin-dependent kinase inhibitor), developed in conjunction with Warner-Lambert Company, that is being looked at in a variety of solid tumor cancers.

Company Financials
In a recent conference call with investors, Onyx disclosed financial results. Seen through the prism of no-nonsense, bottom-line metrics such as annual earnings, Onyx’s almost willfully contrarian lack of product diversification begins to look downright visionary. Despite (or, perhaps, because of) the company’s single-product emphasis, Onyx was able to outperform and outgrow a significant proportion of its competitors, most notably in the categories of net sales and net sales growth. Although the company, like many of its oncology biotechnology counterparts, sustained an overall loss in 2007, it made a great deal of year-over-year progress toward closing its profitability gap.

Nexavar net sales were $124.9 million for the quarter ended December 31, 2007, which represents a 96% increase over the $64 million reported in the same period in 2006 and a 19% increase over the $105 million reported in the quarter ended September 30, 2007. For 2007 as a whole, Nexavar net sales were $372 million, a 125% increase over the $165 million reported in 2006.

“We are pleased with Nexavar’s continued commercial growth, generating worldwide net sales of $125 million for the fourth quarter and $372 million for 2007. The approvals of Nexavar in liver cancer and advanced kidney cancer reinforce our commitment to invest in Nexavar, both commercially and clinically, to maximize the full value of this proven anticancer agent,” said Mr. Renton.

In the fourth quarter of 2007, Onyx recorded R & D expenses of $5.5 million, a decrease of $1.3 million compared with the fourth quarter of 2006. Fourth quarter 2007 selling, general, and administrative expenses were $16 million, an increase of $3.3 million as compared with the fourth quarter of 2006. The increase in selling, general and administrative expenses was primarily attributed to a planned increase in the commercial and administrative personnel to support Nexavar.

A net loss of $0.21 per share was reported for the fourth quarter of 2007, compared with a net loss of $0.47 per share, during the same period in the prior year. For the twelve months ended December 31, 2007, Onyx recorded a net loss of $0.67 per share, compared with a net loss of $2.20 per share, for the same period in 2006.

Despite Onyx’s steady rate of growth and the company’s inroads toward profitability, the equity has seen its fair share of volatility over the past 12 months. Through March and April, the volatile stock stabilized and even recovered somewhat. The stock, which has been showing signs that it is likely to rally further, in a weak but sustained manner, has been steadily but slightly trending upwards through the month of April 2008 (increasing from less than $30 per share at the beginning of the month, to the point where, at midmonth, it had been flirting with a valuation of $35 per share).

Onyx Oncology Pipeline

* Japan        ** European Union