e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2008
or
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from
to
Commission File Number: 0-28298
ONYX PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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94-3154463 |
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer ID Number) |
2100 Powell Street
Emeryville, California 94608
(Address of principal executive offices)
(510) 597-6500
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes þ No o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company.
See the definitions of large accelerated filer, accelerated filer
and smaller reporting company in
Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer þ
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).
Yes o No þ
Indicate the number of shares outstanding of each of the issuers classes of Common Stock, as
of the latest practicable date. The number of outstanding shares of the registrants Common Stock,
$0.001 par value, was 56,135,051 as of July 31, 2008.
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CONDENSED BALANCE SHEETS
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June 30, |
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December 31, |
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2008 |
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2007 |
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(Unaudited) |
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(Note 1) |
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(In thousands) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
236,947 |
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$ |
161,653 |
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Marketable securities |
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190,438 |
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307,997 |
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Receivable from collaboration partner |
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30,293 |
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4,702 |
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Prepaid expenses and other current assets |
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9,419 |
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6,304 |
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Total current assets |
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467,097 |
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480,656 |
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Marketable
securities, non-current |
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43,830 |
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Property and equipment, net |
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2,529 |
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3,146 |
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Other assets |
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274 |
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281 |
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$ |
513,730 |
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$ |
484,083 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
1,127 |
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$ |
271 |
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Payable to collaboration partner |
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5,511 |
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Accrued liabilities |
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3,718 |
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2,065 |
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Accrued clinical trials and related expenses |
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5,442 |
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3,323 |
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Accrued compensation |
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3,801 |
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5,782 |
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Total current liabilities |
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19,599 |
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11,441 |
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Advance from collaboration partner |
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24,861 |
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39,234 |
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Deferred rent and lease incentives |
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1,218 |
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1,171 |
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Commitments and contingencies |
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Stockholders equity: |
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Common stock |
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56 |
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56 |
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Receivable from stock option exercises |
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(240 |
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(23 |
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Additional paid-in capital |
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922,085 |
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904,506 |
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Accumulated other comprehensive gain (loss) |
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(1,083 |
) |
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356 |
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Accumulated deficit |
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(452,766 |
) |
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(472,658 |
) |
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Total stockholders equity |
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468,052 |
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432,237 |
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$ |
513,730 |
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$ |
484,083 |
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See accompanying notes.
3
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2008 |
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2007 |
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2008 |
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2007 |
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(In thousands, except per |
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(In thousands, except per |
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share amounts) |
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share amounts) |
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Net revenue from unconsolidated joint business |
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$ |
30,199 |
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$ |
7,470 |
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$ |
67,937 |
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$ |
10,495 |
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Operating expenses: |
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Research and development |
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8,625 |
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6,448 |
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16,062 |
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11,982 |
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Selling, general and administrative |
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19,822 |
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15,712 |
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39,667 |
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28,895 |
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Total operating expenses |
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28,447 |
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22,160 |
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55,729 |
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40,877 |
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Income (loss) from operations |
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1,752 |
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(14,690 |
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12,208 |
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(30,382 |
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Investment income |
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2,662 |
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3,864 |
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7,933 |
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7,361 |
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Income (loss) before income taxes |
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4,414 |
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(10,826 |
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20,141 |
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(23,021 |
) |
Provision (benefit) for income taxes |
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(60 |
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249 |
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Net income (loss) |
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$ |
4,474 |
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$ |
(10,826 |
) |
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$ |
19,892 |
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$ |
(23,021 |
) |
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Net income (loss) per share: |
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Basic |
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$ |
0.08 |
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$ |
(0.22 |
) |
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$ |
0.36 |
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$ |
(0.49 |
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Diluted |
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$ |
0.08 |
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$ |
(0.22 |
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$ |
0.35 |
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$ |
(0.49 |
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Shares used in computing net income (loss) per share: |
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Basic |
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55,675 |
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48,242 |
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55,531 |
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47,265 |
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Diluted |
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56,472 |
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48,242 |
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56,534 |
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47,265 |
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See accompanying notes.
4
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months Ended June 30, |
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2008 |
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2007 |
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(In thousands) |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
19,892 |
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$ |
(23,021 |
) |
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities: |
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Realized
gains on sales of marketable securities |
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(483 |
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Depreciation and amortization |
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672 |
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434 |
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Stock-based compensation |
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9,884 |
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7,145 |
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Changes in operating assets and liabilities: |
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Receivable from collaboration partner |
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(25,591 |
) |
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2,177 |
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Prepaid expenses and other current assets |
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(3,115 |
) |
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(2,891 |
) |
Other assets |
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7 |
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(105 |
) |
Accounts payable |
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|
856 |
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257 |
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Payable to collaboration partner |
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(8,391 |
) |
Accrued liabilities |
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1,653 |
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|
500 |
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Accrued clinical trials and related expenses |
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2,119 |
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(4,605 |
) |
Accrued compensation |
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(1,981 |
) |
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|
111 |
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Deferred rent and lease incentives |
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47 |
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|
727 |
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Net cash provided by (used in) operating activities |
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3,960 |
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(27,662 |
) |
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Cash flows from investing activities: |
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Purchases of marketable securities |
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(208,558 |
) |
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(175,671 |
) |
Sales of marketable securities |
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82,916 |
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Maturities of marketable securities |
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198,415 |
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112,549 |
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Capital expenditures |
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(55 |
) |
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(2,343 |
) |
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Net cash provided by (used in) investing activities |
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72,718 |
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(65,465 |
) |
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Cash flows from financing activities: |
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Purchases of treasury stock |
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(529 |
) |
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Advance from (payment to) collaboration partner |
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(8,862 |
) |
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Net proceeds from issuances of common stock |
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|
8,007 |
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212,947 |
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Net cash provided by (used in) financing activities |
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(1,384 |
) |
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212,947 |
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Net increase in cash and cash equivalents |
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75,294 |
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|
119,820 |
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Cash and cash equivalents at beginning of period |
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|
161,653 |
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|
94,413 |
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Cash and cash equivalents at end of period |
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$ |
236,947 |
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$ |
214,233 |
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|
See accompanying notes.
5
NOTES TO CONDENSED FINANCIAL STATEMENTS
June 30, 2008
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance
with U.S. generally accepted accounting principles (GAAP) for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the three and six
months ended June 30, 2008 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2008, or for any other future operating periods.
The Condensed Balance Sheet at December 31, 2007 has been derived from the audited financial
statements at that date, but does not include all of the information and footnotes required by GAAP
for complete financial statements.
For further information, refer to the financial statements and footnotes thereto included in the
Onyx Pharmaceuticals, Inc. (the Company or Onyx and the references we, us and our) Annual
Report on Form 10-K for the year ended December 31, 2007 (the 2007 Annual Report).
Note 2. Net Revenue from Unconsolidated Joint Business
Nexavar is currently marketed and sold primarily in the United States and the European Union for
the treatment of advanced kidney cancer and liver cancer. Nexavar also has regulatory applications
pending in other territories internationally. The Company co-promotes Nexavar in the United States
with Bayer Healthcare Pharmaceuticals Corporation Inc., (Bayer) under collaboration and
co-promotion agreements. In March 2006, the Company and Bayer entered into a Co-Promotion Agreement
to co-promote Nexavar in the United States. This agreement amends the original 1994 Collaboration
Agreement and supersedes the provisions of that agreement that relate to the co-promotion of
Nexavar in the United States. Outside of the United States, the terms of the Collaboration
Agreement continue to govern. Under the terms of the Co-Promotion Agreement and consistent with the
Collaboration Agreement, the Company and Bayer will share equally in
the worldwide profits or losses of
Nexavar, if any, subject only to the Companys continued co-funding of the
development costs of Nexavar worldwide, excluding Japan, and the Companys continued co-promotion
of Nexavar in the United States. Outside of the United States,
excluding Japan, Onyx reimburses Bayer a fixed percentage of sales to
reimburse Bayer for their marketing infrastructure before receiving
its share of profits. In the United States, the Company contributes half of the overall
number of sales force personnel required to market and promote Nexavar and half of the medical
science liaisons to support Nexavar. In the United States, the
Company and Bayer each bears their own sales force and
medical science liaison expenses. These expenses are not included in the calculation of the profits
or losses of the collaboration. The collaboration was created through a contractual arrangement,
not through a joint venture or other legal entity. In Japan, Bayer funds all product development,
and the Company receives a single-digit royalty on sales.
The Company reports the amount due to or from Bayer to balance the companies economics under the
Nexavar collaboration as a single line item. This line item consists of the Companys share of the
pretax collaboration profit or loss generated from the collaboration, the
reimbursement of the Companys shared marketing and research and development costs related to
Nexavar and royalty revenue. Under the collaboration, Bayer recognizes all revenue from the sale of Nexavar worldwide.
Prior to the first quarter of 2008, Onyx reported this line item as net expense due to (from)
unconsolidated joint business. The amount generated from the collaboration plus the reimbursement
of the Companys shared marketing and research and development costs related to Nexavar have
resulted in income from operations for the Company since the first quarter of 2007. Therefore, the
Company is reporting this line item as net revenue from unconsolidated joint business beginning in
2008 instead of net expense due from unconsolidated joint business.
6
Net revenue from unconsolidated joint business was $30.2 million and $67.9 million for the three
and six months ended June 30, 2008, respectively. Net revenue from unconsolidated joint business
was $7.5 million and $10.5 million for the three and six months ended June 30, 2007, respectively.
The amounts are calculated as follows:
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2008 |
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2007 |
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2008 |
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2007 |
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(In thousands) |
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(In thousands) |
|
Onyxs share of collaboration profit (loss) |
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$ |
16,233 |
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|
$ |
(1,405 |
) |
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$ |
42,091 |
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|
$ |
(5,834 |
) |
Reimbursement of Onyxs direct development
and marketing expenses |
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|
13,128 |
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|
8,875 |
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|
25,008 |
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|
16,329 |
|
Royalty revenue |
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|
838 |
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|
838 |
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|
|
Net revenue from unconsolidated joint business |
|
$ |
30,199 |
|
|
$ |
7,470 |
|
|
$ |
67,937 |
|
|
$ |
10,495 |
|
|
|
|
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|
The Companys share of the development costs incurred since inception under the collaboration was
$343.0 million as of June 30, 2008 and $253.0 million as of June 30, 2007.
Note 3. Fair Value Measurements
In September 2006, the Financial Accounting Standards Board, or FASB, issued Statement of Financial
Accounting Standards No. 157, Fair Value Measurements (SFAS 157). SFAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with accounting principles generally
accepted in the United States, and expands disclosures about fair value measurements. The Company
has adopted the provisions of SFAS 157 as of January 1, 2008, for all financial assets and
liabilities. The adoption of SFAS 157 did not materially impact the Companys financial condition,
results of operations or cash flow.
SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in
measuring fair value, and requires that certain assets be measured at fair value on a recurring
basis. The three tiers include:
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Level 1, defined as observable inputs such as quoted prices for identical assets in
active markets; |
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Level 2, defined as inputs other than quoted prices in active markets that are
either directly or indirectly observable; and |
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Level 3, defined as unobservable inputs in which little or no market data exists,
therefore requiring management to develop its own assumptions based on best estimates
of what market participants would use in pricing an asset or liability at the reporting
date. |
As of June 30, 2008, the Companys fair value hierarchies for its financial assets, which require
fair value measurement on a recurring basis under SFAS 157, are as follows:
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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(In thousands) |
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|
Money market funds |
|
$ |
143,133 |
|
|
$ |
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|
|
$ |
|
|
|
$ |
143,133 |
|
Commercial paper |
|
|
|
|
|
|
69,698 |
|
|
|
|
|
|
|
69,698 |
|
Auction rate securities |
|
|
|
|
|
|
|
|
|
|
48,830 |
|
|
|
48,830 |
|
U.S. government agencies |
|
|
|
|
|
|
72,008 |
|
|
|
|
|
|
|
72,008 |
|
U.S. treasury bills |
|
|
134,527 |
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|
|
|
|
|
|
|
|
|
|
134,527 |
|
|
|
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|
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|
|
|
|
Total |
|
$ |
277,660 |
|
|
$ |
141,706 |
|
|
$ |
48,830 |
|
|
$ |
468,196 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 3 assets consist of securities with an auction reset feature (auction rate securities),
which are classified as available for sale securities and reflected at fair value. In February
2008, auctions began to fail for these securities and each auction for the majority of these
securities since then has failed. As of June 30, 2008 the fair values of these securities are
estimated utilizing a discounted cash flow analysis. The following table provides a summary of
changes in fair value of the Companys Level 3 financial assets as of June 30, 2008:
7
|
|
|
|
|
|
|
Auction Rate Securities |
|
|
|
(In thousands) |
|
|
|
|
|
Balance at December 31, 2007 |
|
$ |
50,000 |
|
Unrealized loss: |
|
|
|
|
In other comprehensive income |
|
|
(1,170 |
) |
In earnings |
|
|
|
|
|
|
|
|
Balance at June 30, 2008 |
|
$ |
48,830 |
|
|
|
|
|
As a result of
the temporary decline in fair value of the Companys auction rate securities, which
the Company attributes to liquidity rather than credit issues, the Company has recorded an
unrealized loss of $1.2 million included in the accumulated other comprehensive income (loss) line
of stockholders equity. All of the auction rate securities held by the Company at June 30, 2008,
consist of securities collateralized by student loan portfolios, which are substantially guaranteed
by the United States government. Based on the overall failure rate of these auctions, the frequency
of the failures, the underlying maturities of the securities, a portion of which are greater than
30 years, and the Companys belief that the market for these student loan collateralized
instruments may take in excess of twelve months to fully recover, the Company has classified $43.8
million of these auction rate securities as non-current marketable
securities on the unaudited Condensed Balance
Sheet. The remaining $5 million owned in auction rate securities
is classified as current based
on the amount redeemed in July 2008. Any future fluctuation in fair value related to the
non-current
marketable securities that the Company deems to be temporary, including any
recoveries of previous
write-downs, will be recorded in accumulated other comprehensive income (loss). If the Company
determines that any decline in fair value is other than temporary, it will record a charge to
earnings as appropriate.
Note 4. Cash Equivalents and Marketable Securities
Cash equivalents consist of highly liquid investments with original maturities of three months or
less. Marketable securities consist of
securities that are classified as
available for sale under Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities, (SFAS 115). Such securities
are reported at fair value, with unrealized gains and losses excluded from earnings and shown
separately as a component of accumulated other comprehensive income or loss within stockholders
equity. The Company may pay a premium or receive a discount upon the purchase of marketable
securities. Interest earned and gains realized on marketable securities and amortization of
discounts received and accretion of premiums paid on the purchase of marketable securities are
included in investment income.
The Companys investment portfolio includes $50 million of AAA rated securities with an auction
reset feature (auction rate securities) that are collateralized by student loans. Since February
2008, these types of securities have experienced failures in the auction process. As a result of
the auction failures, interest rates on these securities reset at penalty rates linked to Libor or
Treasury bill rates. The penalty rates are generally higher than interest rates set at auction. Due
to the failures in the auction processes, these securities are not currently liquid. Of the $50
million auction rate securities, $5 million in securities were redeemed at par in July 2008.
Therefore, the Company has classified $5 million of these
auction rate securities as current marketable securities and the
remaining $43.8 million as non-current marketable securities on the accompanying unaudited
Condensed Balance Sheet at June 30, 2008. The Company has reduced the carrying value of the
marketable securities classified as non-current by $1.2 million through accumulated other comprehensive income
or loss instead of earnings, which reflects a temporary impairment on
these securities. Of the $50
million invested in failed auction rate securities, the Company estimates the fair value to be
$43.8 million for the non-current auction rate securities based on a discounted cash flow model and
$5 million for the current auction rate securities based on the amount redeemed in July 2008.
Note 5. Stock-Based Compensation
The Company accounts for stock-based compensation to employees and directors in accordance with
Statement of Financial Accounting Standards, or SFAS, No. 123(R), Share-Based Payment, (SFAS
123(R)), which was adopted January 1, 2006, utilizing the modified prospective transition method.
Total employee stock-based compensation expense was $4.3 million and $3.6 million for the three
months ended June 30, 2008 and 2007, respectively, and $9.5 million and
8
$6.6 million for the six
months ended June 30, 2008 and 2007, respectively. The stock-based compensation expense for the six
months ended June 30, 2008 includes $2.0 million for the modifications of stock-based awards
relating to two employees. The terms of the modifications included accelerated vesting and the
extension of the vesting period for stock-based awards previously granted.
Employee Stock Plans
In May 2008, the stockholders approved an amendment to the 2005 Equity Incentive Plan (Incentive
Plan), to increase the number of shares of common stock authorized for issuance under the Incentive
Plan by 3,100,000 shares, to a total of 12,260,045 shares.
Valuation Assumptions
As of June 30, 2008 and 2007, the fair value of stock-based awards for employee stock option awards
and employee stock purchases made under the ESPP was estimated using the Black-Scholes option
pricing model. The following weighted average assumptions were used:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
|
2008 |
|
2007 |
|
2008 |
|
2007 |
Stock Option Plans: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate |
|
|
2.89 |
% |
|
|
4.58 |
% |
|
|
2.85 |
% |
|
|
4.70 |
% |
Expected life |
|
4.4 years |
|
|
4.3 years |
|
|
4.4 years |
|
|
4.3 years |
|
Expected volatility |
|
|
64 |
% |
|
|
64 |
% |
|
|
64 |
% |
|
|
64 |
% |
Expected dividends |
|
None |
|
|
None |
|
|
None |
|
|
None |
|
Weighted average option fair value |
|
$ |
18.42 |
|
|
$ |
16.06 |
|
|
$ |
17.09 |
|
|
$ |
13.55 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Bonus Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected life |
|
3 years |
|
|
3 years |
|
|
3 years |
|
|
3 years |
|
Expected dividends |
|
None |
|
|
None |
|
|
None |
|
|
None |
|
Weighted average fair value per share |
|
$ |
35.67 |
|
|
$ |
24.84 |
|
|
$ |
30.77 |
|
|
$ |
24.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESPP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate |
|
|
3.34 |
% |
|
|
5.17 |
% |
|
|
3.34 |
% |
|
|
5.17 |
% |
Expected life |
|
6 months |
|
|
6 months |
|
|
6 months |
|
|
6 months |
|
Expected volatility |
|
|
64 |
% |
|
|
60 |
% |
|
|
64 |
% |
|
|
60 |
% |
Expected dividends |
|
None |
|
|
None |
|
|
None |
|
|
None |
|
Weighted average shares fair value |
|
$ |
17.18 |
|
|
$ |
4.97 |
|
|
$ |
17.18 |
|
|
$ |
4.97 |
|
Note 6. Net Income (Loss) Per Share
9
Basic net income (loss) per share amounts for each period presented were computed using the
weighted average number of shares of common stock outstanding. Diluted net income (loss) per share
amounts for each period presented were computed using the weighted average number of potential
dilutive common shares issuable in connection with stock-based awards and warrants under the
treasury stock method. Dilutive net income per share does not include the effect of 2,579,015 and
1,488,990 stock-based awards that were outstanding during the three and six months ended June 30,
2008, respectively. These stock-based awards were not included in the computation of diluted net
income per share because the proceeds received, if any, from such stock-based awards combined with
the average unamortized compensation costs were greater than the average market price of our
common stock, and, therefore, their effect would have been antidilutive. Potential dilutive
common shares outstanding consisting of 5,220,068 stock-based awards and warrants were not
included in the computation of diluted net loss per share for the three and six months ended June
30, 2007 because their effect would have been antidilutive.
Note 7. Comprehensive Income (Loss)
Comprehensive income (loss) is composed of net income (loss) and other comprehensive income (loss).
Other comprehensive income (loss) is comprised of unrealized holding gains and losses on the
Companys available-for-sale
securities that are excluded from net income (loss) and reported separately in stockholders equity.
Comprehensive income (loss) and its components are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
|
(In thousands) |
|
|
(In thousands) |
|
Net income (loss) as reported |
|
$ |
4,474 |
|
|
$ |
(10,826 |
) |
|
$ |
19,892 |
|
|
$ |
(23,021 |
) |
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in unrealized gain (loss)
on available-for-sale securities |
|
|
405 |
|
|
|
5 |
|
|
|
(1,439 |
) |
|
|
78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
$ |
4,879 |
|
|
$ |
(10,821 |
) |
|
$ |
18,453 |
|
|
$ |
(22,943 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 8. Long-Term Obligations
The Company
previously received $40.0 million in development payments from Bayer pursuant to its collaboration
agreement. These development payments contain no provision for interest. These development payments
are repayable to Bayer from a portion of the Companys share of collaboration profits after
deducting certain contractually agreed upon expenditures. As of June 30, 2008, $9.6 million of
these development payments has been repaid to Bayer leaving a remaining balance of $30.4 million.
Based on the collaboration profit for the quarter ended June 30, 2008, $5.5 million was
reclassified as a current liability on the Companys accompanying balance sheet as of June 30,
2008.
Note 9. Income Taxes
The Company accounts for income taxes based upon Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes (SFAS 109). Under this method, deferred tax assets and
liabilities are determined based on differences between the financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. The Company continues to carry a full valuation
allowance on all of its deferred tax assets. All tax years remain subject to examination by the
taxing jurisdictions to which the Company is subject.
For the quarter ended June 30, 2008, in accordance with APB 28,
Interim Financial Reporting, and
Interpretation No. 18, Accounting for Income Taxes in Interim Periods and Interpretation of APB
Opinion No. 28, the Company calculated its income tax provision on a year-to-date basis
instead of estimating its annual effective tax rate. Therefore, the Company recorded an income
tax benefit of $60,000 for the three months ended June 30, 2008 and a provision for income taxes of
$249,000 for the six months ended June 30, 2008 related to income from operations. Based on the
Companys ability to fully offset federal taxable income with its net operating loss carryforwards,
the Companys estimated tax expense is principally related to federal alternative minimum
tax.
10
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The Quarterly Report on Form 10-Q, including the following Managements Discussion and Analysis of Financial Condition and Results of Operations
contains forward-looking statements that involve risks and uncertainties. We use words such as
may, will, expect, anticipate, estimate, intend, plan, predict, potential,
believe, should and similar expressions to identify forward-looking statements. These
statements appearing throughout our Form 10-Q are statements regarding our intent, belief, or
current expectations, primarily regarding our operations and the development and commercialization of Nexavar. Forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ materially from those projected.
You should not place undue reliance on
these forward-looking statements, which speak only as of the date of this Form 10-Q. Our actual
results could differ materially from those anticipated in these forward-looking statements for many
reasons, including those set forth under Item 1A Risk Factors in this Quarterly Report on Form
10-Q. Except as required by law, we expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained herein to reflect any
change in our expectations with regard thereto or any change in events, conditions or circumstances
on which any such statement
is based.
Overview
We are a biopharmaceutical company dedicated to developing innovative therapies that target the
molecular mechanisms that cause cancer. With our collaborators, we are developing small molecule
drugs with the goal of changing the way cancer is treated TM. We are applying our
expertise to develop and commercialize oral anticancer therapies designed to prevent cancer cell
proliferation and angiogenesis by inhibiting proteins that signal or support tumor growth. By
exploiting the genetic differences between cancer cells and normal cells, we aim to develop and
market novel anticancer agents that minimize damage to healthy tissue. Our first commercially
available product, Nexavar® (sorafenib) Tablets, being developed with our collaborator,
Bayer HealthCare Pharmaceuticals Inc., or Bayer, is approved in the United States, European Union
and other territories worldwide, for advanced kidney cancer and liver cancer. Nexavar is a novel,
orally available kinase and angiogenesis inhibitor, a new class of anticancer treatments that
target signaling pathways important to the proliferation of cancer cells. In December 2005 Nexavar
became the first newly approved systemic therapy for patients with advanced kidney cancer in over a
decade. Subsequently, in the fourth quarter of 2007, Nexavar was approved as the first and is
currently the only systemic therapy for the treatment of patients with liver cancer. With our
collaborator, Bayer, we are commercializing Nexavar
® (sorafenib) tablets, for the
treatment of patients with advanced kidney cancer and liver cancer. Nexavar is now approved in more
than 70 countries for the treatment of advanced kidney cancer and in more than 40 countries for the
treatment of liver cancer with additional approvals pending. In the United States, Bayer and Onyx co-promote Nexavar. Outside of the
United States, Bayer manages all commercialization activities. For the quarters ended June 30, 2008
and 2007, total worldwide net sales of Nexavar as recorded by Bayer were $168.5 and $81.3 million,
respectively.
With the approval of Nexavar for the treatment of advanced kidney cancer and liver cancer, we and
Bayer have established the Nexavar brand and created a global commercial oncology presence. In
order to benefit as many patients as possible, we and Bayer are continuing to investigate the
administration of Nexavar with previously approved anticancer therapeutics in other cancers and
settings and in combination with existing therapies. We and Bayer have ongoing clinical trials in
lung cancer, breast cancer and several other cancers.
We and Bayer are developing and marketing Nexavar under our collaboration and co-promotion
agreements. We fund 50% of the development costs for Nexavar worldwide, excluding Japan. With
Bayer, we co-promote Nexavar in the United States and share equally in any profits or losses.
Outside of the United States, excluding Japan, Bayer has exclusive marketing and commercialization
rights of Nexavar and we share profits equally. In Japan, Bayer funds all product development, and
we receive a single-digit royalty on sales.
We have
had significant losses since our inception. Our ability to achieve continued and sustainable
profitability is uncertain and is dependant on a number of factors. These factors include, but are
not limited to, the level of patient demand for Nexavar, the ability of Bayers distribution
network to process and ship product on a timely basis, investments in sales and marketing efforts
to support the sales of Nexavar, Bayer and our investments in the research and development of
Nexavar, fluctuations in foreign exchange rates, and expenditures we may incur to acquire
additional products. Our operating results will likely fluctuate from fiscal quarter to fiscal
quarter and from year to year, and are difficult to predict. Since inception, we have relied on
public and private financings, combined with milestone payments from our collaborators to fund our
operations and may continue to do so in future periods. As of June 30, 2008, our accumulated
deficit was approximately $452.8 million.
11
Our business is subject to significant risks, including the risks inherent in our development
efforts, the results of the Nexavar clinical trials, the marketing of Nexavar as a treatment for
patients in approved indications, our dependence on collaborative parties, uncertainties associated
with obtaining and enforcing patents, the lengthy and expensive regulatory approval process and
competition from other products. For a discussion of these and some of the other risks and
uncertainties affecting our business, see Item 1A Risk Factors of this Quarterly Report on
Form
10-Q.
Critical Accounting Policies and the Use of Estimates
Critical accounting policies are those that require significant estimates, assumptions and
judgments by management about matters that are inherently uncertain at the time that the financial
statements are prepared such that materially different results might have been reported if other
assumptions had been made. These estimates form the basis for making judgments about the carrying
values of assets and liabilities. We base our estimates and judgments on historical experience and
on various other assumptions that we believe to be reasonable under the circumstances. We consider
certain accounting policies related to net revenue from unconsolidated joint business, stock-based
compensation, research and development expenses and use of estimates to be critical policies.
Significant estimations used in 2008 included assumptions used in the determination of stock-based
compensation related to stock options granted, net revenue from unconsolidated joint business, and
research and development expenses. Actual results could differ materially from these estimates.
There were no changes to our critical accounting policies since we filed our Annual Report on Form
10-K, for the year ended December 31, 2007, with the Securities and Exchange Commission, or SEC.
For a description of our critical accounting policies, please refer to our 2007 Annual Report on
Form 10-K for the fiscal year ended December 31, 2007.
Results of Operations
Three and six months ended June 30, 2008 and 2007
Revenue
Nexavar, our only marketed product, was approved in the U.S. in December 2005. In accordance with
our collaboration agreement with Bayer, Bayer recognizes all revenue from the sale of Nexavar. As
such, for the three and six months ended June 30, 2008 and 2007,
we reported no revenue from product sales. For the
three and six months ended June 30, 2008, total Nexavar net sales as recorded by Bayer, which
include revenue subject to royalty, were $168.5 million and $320.4 million, respectively, primarily
from sales in the United States and the European Union. The increase in total Nexavar net sales
recorded by Bayer represents an increase of $87.2 million, or 107%, and $178.2 million, or 125%,
over total Nexavar net sales of $81.3 million and $142.2 million recorded by Bayer for the three
and six months ended June 30, 2007, respectively.
Net Revenue from Unconsolidated Joint Business
Nexavar is currently marketed and sold in the United States, several countries in the European
Union and other countries worldwide. We co-promote Nexavar in the United States with Bayer under a
collaboration agreement. Under the terms of the collaboration agreement, we share equally in the
worldwide profits or losses of Nexavar, if any, subject only to our continued
co-funding of the development costs of Nexavar worldwide, excluding Japan, and our continued
promotion of Nexavar in the United States. In the United States, we contribute half of the overall
number of sales force personnel required to market and promote Nexavar and half of the medical
science liaisons to support Nexavar. In the United States, Onyx and
Bayer each bears their own sales force and medical
science liaison expenses. These expenses are not included in the calculation of the profits or
losses of the collaboration. In Japan, Bayer funds all product
development, and we receive a single-digit royalty on sales.
We report the amount due to or from Bayer to balance the companies economics under the Nexavar
collaboration as a single line item. This line item consists of Onyxs share of the pretax
collaboration profit (loss) generated from the collaboration, the
reimbursement of Onyxs marketing and research and development costs related to Nexavar and royalty revenue. Net
revenue from unconsolidated joint business for the three and six months ended June 30, 2008 and
2007 is calculated as follows:
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2008 |
|
|
2007 |
|
|
2008 |
|
|
2007 |
|
|
|
(In thousands) |
|
Nexavar product revenue, net (as recorded by
Bayer) |
|
$ |
168,520 |
|
|
$ |
81,332 |
|
|
$ |
320,416 |
|
|
$ |
142,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
subject to profit sharing, (as recorded by Bayer) |
|
|
156,547 |
|
|
|
81,332 |
|
|
|
308,443 |
|
|
|
142,212 |
|
Combined cost of goods sold, distribution,
selling, general and administrative expenses |
|
|
80,135 |
|
|
|
49,285 |
|
|
|
142,838 |
|
|
|
85,734 |
|
Combined research and development expenses |
|
|
43,946 |
|
|
|
34,856 |
|
|
|
81,424 |
|
|
|
68,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined collaboration profit (loss) |
|
$ |
32,466 |
|
|
$ |
(2,809 |
) |
|
$ |
84,181 |
|
|
$ |
(11,668 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Onyxs share of collaboration profit (loss) |
|
$ |
16,233 |
|
|
$ |
(1,405 |
) |
|
$ |
42,091 |
|
|
$ |
(5,834 |
) |
Reimbursement of Onyxs direct development
and marketing expenses |
|
|
13,128 |
|
|
|
8,875 |
|
|
|
25,008 |
|
|
|
16,329 |
|
Royalty revenue |
|
|
838 |
|
|
|
|
|
|
|
838 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue from unconsolidated joint business |
|
$ |
30,199 |
|
|
$ |
7,470 |
|
|
$ |
67,937 |
|
|
$ |
10,495 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three and six months ended June 30, 2008, net revenue from unconsolidated joint business
was $30.2 million and $67.9 million, respectively. For the three and six months ended June 30,
2007, net revenue from unconsolidated joint business was $7.5 million and $10.5 million,
respectively. The increase in net revenue from unconsolidated joint business is primarily due to an
increase in Nexavar product sales recognized by Bayer and royalty income offset by increases in the
combined commercial expenses to support the launch of Nexavar around the world and increased
development expenses for Nexavar primarily related to ongoing clinical trials in liver cancer, lung
cancer and breast cancer.
Net
revenue due from unconsolidated joint business increases/decreases
with changes in the profitability of
the collaboration and with changes in the amount of reimbursement for our direct development and
marketing expenses. We expect Bayers and our shared Nexavar research and development expenses to
increase in future periods as the companies develop Nexavar for indications beyond liver and
advanced kidney cancer. With the ongoing launch activities for Nexavar and pending approvals in
many international territories, we also expect Bayers and our shared cost of goods sold,
distribution, selling and general administrative expense to increase as Bayer continues to expand
Nexavar marketing and sales activities outside of the United States.
Research and Development Expenses
Research and development expenses were $8.6 million for the three months ended June 30, 2008, a net
increase of $2.2 million, or 34%, from $6.4 million in the same period in 2007. For the six months
ended June 30, 2008, research and development expenses were $16.1 million, a net increase of $4.1
million, or 34%, from $12.0 million in the same period in 2007. These increases are primarily due
to the increase in headcount and funding related to activities in our breast cancer program for
Nexavar partially offset by a decrease in activities in the melanoma program for Nexavar.
The major components of research and development costs include clinical manufacturing costs,
clinical trial expenses, consulting and other third-party costs, salaries and employee benefits,
stock-based compensation expense, supplies and materials, and allocations of various overhead and
occupancy costs. We expect research and development expenses to increase as we increase clinical
development activity related to Nexavar.
Together with Bayer, we have implemented a broad-based global development strategy for Nexavar that
implements simultaneous clinical programs currently designed to expand the number of approved
indications of Nexavar and evaluate the use of Nexavar in new and/or novel combinations. Our global
development plan has included major Phase 3 studies in lung, kidney and liver in the past, and
currently includes additional major Phase 3 clinical trials in metastatic melanoma comparing the
administration of Nexavar in combination with the chemotherapeutics carboplatin and paclitaxel, as
well as Nexavar with standard chemotherapeutic agents in non-small cell lung cancer. The completion
dates of these trials are currently unknown. As of June 30, 2008, our share of the Nexavar
development costs incurred to date under the collaboration were $343.0 million.
13
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $19.8 million for the three months ended June 30,
2008, a net increase of $4.1 million, or 26%, from $15.7 million in the same period in 2007. For
the six months ended June 30, 2008, selling, general and administrative expenses were $39.7
million, a net increase of $10.8 million, or 37%, from $28.9 million in the same period in 2007.
The increases for the three and six months ended June 30, 2008 are due to Onyx incurring more of
the shared marketing expenses in the United States and an increase in headcount in the commercial
and administrative functions, including executive and corporate development, to support our planned
growth. Additionally, the six months ended June 30, 2008 included non-recurring employee related
expenses consisting of $2.0 million for modifications of previously granted stock-based awards for
two employees and $2.0 million for compensation, search fees and other expenses related to the
transition of the chief executive officer.
Selling, general and administrative expenses consist primarily of salaries, employee benefits,
consulting, advertising and promotion expenses, other third party costs, corporate functional
expenses and allocations for overhead and occupancy costs. We expect our selling, general and
administrative expenses to increase due to increases in marketing expenses relating to Nexavar and
increases in personnel.
Investment Income
Investment income consists of interest income and realized gains or losses from the sale of
marketable securities. We had investment income of $2.7 million for the three months ended June
30, 2008, a decrease of $1.2 million from $3.9 million in the same period in 2007. The decrease is
due to lower interest rates and a change in the asset allocation of our investment portfolio.
For the six months ended June 30, 2008, we recorded investment income of $7.9 million, an increase
of $0.5 million from $7.4 million in the same period in 2007. The increase was primarily due to
higher average investment balances for the six months ended June 30, 2008 offset by lower interest
rates from the change in the asset allocation of our investment portfolio.
Liquidity and Capital Resources
Except for 2008, we have incurred significant losses since our inception, and we have relied primarily on public
and private financing, combined with milestone payments received from our collaborations to fund
our operations.
At June 30, 2008, we had cash, cash equivalents and current and non-current marketable securities of
$471.2 million, compared to $469.7 million at December 31, 2007. The increase of $1.5 million was
primarily attributable to net cash provided by operations of $4.0 million. This cash provided by
operations was partially offset by net cash used in financing activities of $1.4 million in the
six-month period ended June 30, 2008.
Our collaboration agreement with Bayer entitles us to receive creditable milestone-based payments.
These amounts are interest-free and are repayable to Bayer from a portion of any of our
collaboration profits and royalties. We previously received a total of $40.0 million of milestone
payments from Bayer in connection with the approval of Nexavar. As of June 30, 2008, $9.6 million
of these development payments has been repaid to Bayer leaving a remaining balance of $30.4
million. Based on the collaboration profit for the three months ended June 30, 2008, $5.5 million
has been reclassified as a current liability on our accompanying unaudited Condensed Balance Sheet at of June 30, 2008.
Total capital expenditures, primarily for furniture and information technology software, for
the six-month period ended June 30, 2008, were approximately $55,000. We currently expect to make
capital expenditures of approximately $3.6 million for the remainder of 2008 for leasehold
improvements, furniture and equipment, and information technology software.
Our investment portfolio includes $50 million of AAA rated securities with an auction reset feature
(auction rate securities) collateralized by student loans. Since February 2008, these types of
securities have experienced failures in the auction process. As a result of the auction failures,
interest rates on these securities reset at penalty rates linked to Libor or Treasury bill rates.
The penalty rates are generally higher than interest rates set at auction. Due to failures in the
auction processes, these securities are not currently liquid. Of the $50 million auction rate
securities, $5 million in securities was
redeemed at par in July 2008. Therefore, we have classified $5 million of these auction rate
securities as current marketable securities
14
and the remaining $45 million as
non-current marketable securities on the
accompanying unaudited Condensed Balance Sheet at June 30, 2008. We have reduced the carrying value
of these marketable securities by $1.2 million through accumulated other comprehensive income or loss instead
of earnings, which reflects a temporary impairment on these securities. Further adverse
developments in the credit market could result in an impairment charge through earnings in the
future. Of the $50 million invested in failed auction rate securities, we estimate the fair value
to be $48.8 million, which is comprised of $5 million in current marketable securities
for the securities
redeemed in July 2008 and $43.8 million of
non-current marketable securities based on a discounted cash flow
model. The discounted cash flow model used to value the non-current marketable securities is based on a
specific term and liquidity assumptions. An increase in either of these assumptions could result in
a $500,000 decrease in value. Alternatively, a decrease in either of the assumptions could result
in a $600,000 increase in value.
Currently, we believe the
marketable securities classified as non-current are not other-than-temporarily
impaired as all of them are substantially backed by the federal government, but it is not clear in
what period of time they will be settled. We believe that, even after reclassifying these
securities to non-current and the possible requirement to hold all such securities for an
indefinite period of time, our remaining cash and cash equivalents and
current marketable securities will
be sufficient to meet our anticipated cash needs for at least the next twelve months.
We believe that our existing capital resources and interest thereon will be sufficient to fund
our current and planned operations beyond 2009. However, if we change our development plans,
including acquiring additional product candidates or complementary businesses, we may need
additional funds sooner than we expect. In addition, we anticipate that our co-development costs
for the Nexavar program may increase over the next several years as we continue to fund our share
of the clinical development program and prepare for potential product launches throughout the
world. These costs are currently unknown, but in the future we may need to raise additional capital
to continue to co-fund the program beyond 2009. We intend to seek any required additional funding
through collaborations, public and private equity or debt financings, capital lease transactions or
other available financing sources. Additional financing may not be available on acceptable terms,
if at all. If additional funds are raised by issuing equity securities, substantial dilution to
existing stockholders may result. If adequate funds are not available, we may be required to delay,
reduce the scope of or eliminate one or more of our development programs or to obtain funds through
collaborations with others that are on unfavorable terms or that may require us to relinquish
rights to certain of our technologies, product candidates or products that we would otherwise seek
to develop on our own.
Recently Issued Accounting Standards
In December 2007, the Emerging Issues Task Force, or EITF, issued Issue No. 07-1, Accounting for
Collaboration Arrangements Related to the Development and Commercialization of Intellectual
Property (EITF 07-1), which focuses on how the parties to a collaborative arrangement should
account for costs incurred and revenue generated on sales to third parties, how sharing payments
pursuant to a collaboration agreement should be presented in the income statement and certain
related disclosure questions. EITF 07-1 is effective for all fiscal years ending after December 15,
2008. Upon adoption of ETIF 07-1, we expect to revise our financial presentation by changing the
classification of certain amounts related to our collaboration with Bayer in the Statement of
Operations. This will have no impact on previously reported amounts of net income (loss) or net
income (loss) per share.
15
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The primary objective of our investment activities is to preserve principal while at the same time
maximize the income we receive from our investments without significantly increasing risk. Our
exposure to market rate risk for changes in interest rates relates primarily to our investment
portfolio. This means that a change in prevailing interest rates may cause the principal amount of
the investments to fluctuate. By policy, we minimize risk by placing our investments with high
quality debt security issuers, limit the amount of credit exposure to any one issuer, limit
duration by restricting the term, and hold investments to maturity except under rare circumstances.
We maintain our portfolio of cash equivalents and marketable securities in a variety of securities,
including commercial paper, money market funds, and investment grade government and non-government
debt securities. Through our money managers, we maintain risk management control systems to monitor
interest rate risk. The risk management control systems use analytical techniques, including
sensitivity analysis. If market interest rates were to increase by 100 basis points, or 1%, as of
June 30, 2008, the fair value of our portfolio would decline by approximately $506,000.
The table below presents the amounts and related weighted interest rates of our cash equivalents
and marketable securities at:
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June 30, 2008 |
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December 31, 2007 |
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Average |
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Average |
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Fair Value |
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Interest |
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Fair Value |
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Interest |
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Maturity |
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(In millions) |
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Rate |
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Maturity |
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(In millions) |
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Rate |
Cash equivalents, fixed rate |
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0 - 3 months |
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$ |
233.9 |
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1.97 |
% |
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0 - 2 months |
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$ |
160.0 |
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4.79 |
% |
Marketable securities,
fixed rate |
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0 - 18 months |
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$ |
234.3 |
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2.19 |
% |
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0 - 12 months |
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$ |
308.0 |
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4.75 |
% |
We did not hold any derivative instruments as of June 30, 2008, and we have not held derivative
instruments in the past. However, our investment policy does allow us to use derivative financial
instruments for the purposes of hedging foreign currency denominated obligations. Our cash flows
are denominated in U.S. dollars.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures: The Companys chief executive officer and chief
financial officer reviewed and evaluated the Companys disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended).
Based on that evaluation, the Companys principal executive officer and principal financial officer
concluded that the Companys disclosure controls and procedures were effective as of June 30, 2008
to ensure the information required to be disclosed by the Company in this Quarterly Report on Form
10-Q is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and forms.
Changes in Internal Control over Financial Reporting: There were no changes in the Companys
internal control over financial reporting during the quarter ended June 30, 2008 that have
materially affected, or are reasonably likely to materially affect the Companys internal control
over financial reporting.
Inherent Limitations on Effectiveness of Controls: Internal control over financial reporting may
not prevent or detect all errors and all fraud. Also, projections of any evaluation of
effectiveness of internal control to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
16
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material legal proceedings.
Item 1A. Risk Factors
You should carefully consider the risks described below, together with all of the other information
included in this report, in considering our business and prospects. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial also may impair our business operations. Each of these risk factors could
adversely affect our business, operating results and financial condition, as well as adversely
affect the value of an investment in our common stock.
We have marked with an asterisk (*) those risk factors below that reflect material changes from the
risk factors included in our 2007 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on February 28, 2008.
Nexavar® (sorafenib) tablets is our only product. If Nexavar is not commercially
successful and we are unable to develop and commercialize alternative product candidates our
business would fail.*
Nexavar is our only product and we do not have a clinical development pipeline beyond Nexavar. We
do not have internal research or preclinical development capabilities. If Nexavar is not
commercially successful and we are unable to develop and commercialize alternative product
candidates our business would fail.
There are several therapies approved as well as several therapies in development for the treatment of
advanced kidney cancer. If Nexavar is unable to successfully compete against existing and future
therapies in advanced kidney cancer, our business would be harmed.*
There are several competing therapies approved for the treatment of kidney cancer. Examples of
products approved for the treatment of advanced kidney cancer include Sutent, a multi-kinase
inhibitor marketed in the United States, the European Union and other countries by Pfizer; Torisel,
an mTOR inhibitor marketed in the United States, the European Union and other countries by Wyeth;
and Avastin, an angiogenesis inhibitor approved for the treatment of advanced kidney cancer in the
European Union and marketed by Genentech and Roche globally. Nexavars market share in advanced kidney cancer has decreased
following introduction of these products into the market.
A demonstrated survival benefit is an important element in determining standard of care.
While we did not demonstrate a statistically significant overall survival benefit for patients
treated with Nexavar in our Phase 3 kidney cancer trial, we believe the outcome was impacted by the
cross over of patients from placebo to Nexavar during the conduct of our pivotal clinical trial. Competitors with
statistically significant overall survival data could be preferred in the marketplace, which could
impair our ability to successfully market Nexavar.
The use of any particular therapy may limit the use of a competing therapy with a similar mechanism
of action. The FDA approval of Nexavar permits Nexavar to be used as an initial, or first-line,
therapy for the treatment of advanced kidney cancer, but some other approvals do not. For example,
the European Union approval indicates Nexavar only for advanced kidney cancer patients that have
failed prior therapy or whose physicians deem alternate therapies inappropriate.
We expect the competition to increase
as additional products are approved to treat advanced kidney
cancer. Products in development for advanced
kidney cancer include GlaxoSmithKlines pazopanib, a multi-kinase inhibitor and Novartiss
everolimus an mTOR inhibitor, among others. Positive phase 3 results of everolimus were presented in
June 2008. The successful introduction of other new therapies to treat advanced
kidney cancer could
significantly reduce the potential market for Nexavar in this indication.
17
There are several existing approaches and several therapies in development for the treatment of
liver cancer. If Nexavar is unable to successfully compete against existing and future therapies in
liver cancer, our business would be harmed.*
There are many existing approaches used for liver cancer including alcohol injection,
radiofrequency ablation, chemoembolization, cryoablation and radiation therapy. While Nexavar is
the first systemic therapy to demonstrate a survival benefit for liver cancer, several other
therapies are in development. Examples of products in development for liver cancer include Pfizers
Sutent, a multi-kinase inhibitor. If Nexavar is unable to compete successfully with existing
approaches or if new therapies are developed for liver cancer, our business would be harmed.
Although Nexavar has been approved in the United States, European Union and other territories for
the treatment of patients with liver cancer, adoption may be slow or limited for a variety of
reasons including the geographic distribution of the patient population, the current treatment
paradigm for liver cancer patients, the underlying liver disease present in most liver cancer
patients and limited reimbursement. If Nexavar is not broadly adopted for the treatment of liver
cancer, our business would be harmed.*
Nexavar has been approved in the United States, the European Union and many other countries as the
first systemic treatment for liver cancer. The rate of adoption and the ultimate market size will
be dependent on several factors including educating treating physicians on the appropriate use of
Nexavar and the management of patients who are receiving Nexavar. This may be difficult due to
patients typically having underlying liver disease and comorbidities in addition to their liver
cancer and often being treated by a variety of medical specialists. In addition, screening,
diagnostic and treatment practices can vary significantly by region. Further, liver cancer is
common in many regions in the developing world where the healthcare systems are limited and
reimbursement for Nexavar is not available, which will likely limit or slow adoption. If we are
unable to change the treatment paradigms for this disease, we may be unable to successfully
commercialize Nexavar for this indication, which could harm our business.
While we and Bayer have received marketing approval for Nexavar in the United States, the European
Union and other territories, to treat liver cancer, many regulatory authorities have not completed
their review of the submissions and any review may not result in marketing approval by these other
authorities in this indication. In addition, although Nexavar is approved for the treatment of
patients with liver cancer in the European Union and elsewhere, certain countries require pricing
to be established before reimbursement for this indication may be obtained. We may not receive
pricing approvals at favorable levels or at all, which could harm our ability to broadly market
Nexavar.
If our ongoing and planned clinical trials fail to demonstrate that Nexavar is safe and effective
or we are unable to obtain necessary regulatory approvals, we will be unable to expand the
commercial market for Nexavar and our business may fail.*
In collaboration with Bayer, we are conducting multiple clinical trials of Nexavar. We are
currently conducting a number of clinical trials of Nexavar alone or in combination with other
anticancer agents in kidney, liver, non-small cell lung, breast, melanoma, and other cancers
including a number of Phase 3 clinical trials.
Phase 3 trials are designed to more rigorously test the efficacy of a product candidate and are
normally randomized and double-blinded. Phase 3 trials are typically monitored by independent data
monitoring committees, or DMC, which periodically review data as a trial progresses. A DMC may
recommend that a trial be stopped before completion for a number of reasons including safety
concerns, patient benefit or futility. Our clinical trials may fail to demonstrate that Nexavar is
safe and effective, and Nexavar may not gain additional regulatory approval, which would limit the
potential market for the product causing our business to fail.
Nexavar has not been approved in cancer types other than advanced kidney and liver cancers. Success
in one or even several cancer types does not indicate that Nexavar would be approved or have
successful clinical trials in other cancer types. For example, Bayer and Onyx have conducted Phase 3
trials in melanoma and non-small cell lung cancer that were not successful. In addition, in the
non-small cell lung cancer Phase 3 trial, higher mortality was observed in the subset of patients
with squamous cell carcinoma of the lung treated with Nexavar and carboplatin and paclitaxel versus
those treated with carboplatin and paclitaxel alone. Based on this observation, further enrollment
of squamous cell carcinoma of the lung
18
has been suspended from other ongoing NSCLC trials sponsored by us. Other cancer types with a
histology similar to squamous cell carcinoma of the lung may yield a similar adverse treatment
outcome. If so, patients having this histology may be excluded from ongoing and future clinical
trials, which could potentially delay clinical trial enrollment and would reduce the number of
patients that could potentially receive Nexavar.
Further, many companies have failed to demonstrate the effectiveness of pharmaceutical product
candidates in Phase 3 clinical trials notwithstanding favorable results in Phase 1 or Phase 2
clinical trials. In addition, if previously unforeseen and unacceptable side effects are observed,
we may not proceed with further clinical trials of Nexavar. In our clinical trials, we may treat
patients who have failed conventional treatments and who are in advanced stages of cancer. During
the course of treatment, these patients may die or suffer adverse medical effects for reasons
unrelated to Nexavar. These adverse effects may impact the interpretation of clinical trial
results, which could lead to an erroneous conclusion regarding the toxicity or efficacy of Nexavar.
We are dependent upon our collaborative relationship with Bayer to further develop, manufacture and
commercialize Nexavar. There may be circumstances that delay or prevent Bayers ability to
development, manufacture and commercialize Nexavar.
Our strategy for developing, manufacturing and commercializing Nexavar depends in large part upon
our relationship with Bayer. If we are unable to maintain our collaborative relationship with
Bayer, we would need to undertake development, manufacturing and marketing activities at our own
expense. This would significantly increase our capital and infrastructure requirements, may limit
the indications we are able to pursue and could prevent us from effectively developing and
commercializing Nexavar.
We are subject to a number of risks associated with our dependence on our collaborative
relationship with Bayer, including:
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adverse decisions by Bayer regarding the amount and timing of resource expenditures
for the development and commercialization of Nexavar; |
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possible disagreements as to development plans, including clinical trials or
regulatory approval strategy; |
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the right of Bayer to terminate its collaboration agreement with us on limited
notice and for reasons outside our control; |
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loss of significant rights if we fail to meet our obligations under the
collaboration agreement; |
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withdrawal of support by Bayer following the development or acquisition by it of
competing products; |
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changes in key management personnel at Bayer that are members of the collaborations
executive team; and |
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possible disagreements with Bayer regarding the collaboration agreement or ownership
of proprietary rights. |
Due to these factors and other possible disagreements with Bayer, we may be delayed or prevented
from further developing, manufacturing or commercializing Nexavar, or we may become involved in
litigation or arbitration, which would be time consuming and expensive.
Our collaboration agreement with Bayer terminates when patents expire that were issued in
connection with product candidates discovered under that agreement, or upon the time when neither
we nor Bayer are entitled to profit sharing under that agreement, whichever is later. Bayer holds
the global patent applications related to Nexavar. The patents and patent applications covering
Nexavar are owned by Bayer, but licensed to us through our collaboration agreement with Bayer.
Bayer has a United States patent that covers pharmaceutical compositions of Nexavar, which will
expire in 2022. Bayer also has a European patent that covers Nexavar, which will expire in 2020.
Bayer has other patent applications that are pending worldwide that cover Nexavar alone or in
combination with other drugs for treating cancer.
We face intense competition and rapid technological change, and many of our competitors have
substantially greater resources than we have.
We are engaged in a rapidly changing and highly competitive field. We are seeking to develop and
market Nexavar to compete with other products and therapies that currently exist or are being
developed. Many other companies are actively seeking to develop products that have disease targets
similar to those we are pursuing. Some of these competitive product
19
candidates are in clinical trials and others are approved. Competitors that target the same tumor
types as our Nexavar program and that have commercial products or product candidates at various
stages of clinical development include Pfizer, Genentech, Inc., Wyeth, Novartis International AG,
Amgen, AstraZeneca PLC, OSI Pharmaceuticals, Inc., GlaxoSmithKline, Imclone Systems and several
others. A number of companies have agents such as small molecules or antibodies targeting Vascular
Endothelial Growth Factor, or VEGF; VEGF receptors; Epidermal Growth Factor, or EGF; EGF receptors;
and other enzymes. In addition, many other pharmaceutical companies are developing novel cancer
therapies that, if successful, would also provide competition for Nexavar.
Many of our competitors, either alone or together with collaborators, have substantially greater
financial resources and research and development staffs. In addition, many of these competitors,
either alone or together with their collaborators, have significantly greater experience than we do
in:
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developing products; |
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undertaking preclinical testing and human clinical trials; |
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obtaining FDA and other regulatory approvals of products; and |
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manufacturing and marketing products. |
Accordingly, our competitors may succeed in obtaining patent protection, receiving FDA approval or
commercializing product candidates before we do. We will compete with companies with greater
marketing and manufacturing capabilities, areas in which we have limited or no experience.
We also face, and will continue to face, competition from academic institutions, government
agencies and research institutions. Further, we face numerous competitors working on product
candidates to treat each of the diseases for which we are seeking to develop therapeutic products.
In addition, our product candidates, if approved, may compete with existing therapies that have
long histories of safe and effective use. We may also face competition from other drug development
technologies and methods of preventing or reducing the incidence of disease and other classes of
therapeutic agents.
Developments by competitors may render our product candidates obsolete or noncompetitive. We face
and will continue to face intense competition from other companies for collaborations with
pharmaceutical and biotechnology companies, for establishing relationships with academic and
research institutions, and for licenses to proprietary technology. These competitors, either alone
or with collaborative parties, may succeed with technologies or products that are more effective
than ours.
We anticipate that we will face increased competition in the future as new companies enter our
markets and as scientific developments surrounding other cancer therapies continue to accelerate.
We have made significant expenditures toward the development of Nexavar and the establishment of a
commercialization infrastructure. If Nexavar cannot compete effectively in the marketplace, we may
be unable to realize sufficient revenue from Nexavar to offset our expenditures toward its
development and commercialization, and our business will suffer.
Our operating results are unpredictable and may fluctuate. If our operating results are below the
expectations of securities analysts or investors, the trading price of our stock could decline.
Our operating results will likely fluctuate from fiscal quarter to fiscal quarter and from year to
year, and are difficult to predict. Due to a highly competitive environment with existing and
emerging products in new markets, Nexavar sales will be difficult to predict from period to period.
Our operating expenses are highly dependant on expenses incurred by Bayer and are largely
independent of Nexavar sales in any particular period. We believe that our quarterly and annual
results of operations may be negatively affected by a variety of factors. These factors include,
but are not limited to, the level of patient demand for Nexavar, the timing and level of
investments in sales and marketing efforts to support the sales of Nexavar, the timing and level of
investments in the research and development of Nexavar, the ability of Bayers distribution network
to process and ship product on a timely basis, fluctuations in foreign currency exchange rates and
expenditures we may incur to acquire additional products.
In addition, as a result of our adoption of SFAS 123(R), we must measure compensation cost for
stock-based awards made to employees at the grant date of the award, based on the fair value of the
award, and recognize the cost as an expense over
20
the employees requisite service period. As the variables that we use as a basis for valuing these
awards change over time, the magnitude of the expense that we must recognize may vary
significantly. Any such variance from one period to the next could cause a significant fluctuation
in our operating results.
It is, therefore, difficult for us to accurately forecast profits or losses. As a result, it is
possible that in some quarters our operating results could be below the expectations of securities
analysts or investors, which could cause the trading price of our common stock to decline, perhaps
substantially.
The market may not accept our products and pharmaceutical pricing and reimbursement pressures may
reduce profitability.
Nexavar or any future product candidates that we may develop may not gain market acceptance among
physicians, patients, healthcare payors and/or the medical community or the market may not be as
large as forecasted. One factor that may affect market acceptance of Nexavar or any future products
we may develop is the availability of third-party reimbursement. Our commercial success may depend,
in part, on the availability of adequate reimbursement for patients from third-party healthcare
payors, such as government and private health insurers and managed care organizations. Third-party
payors are increasingly challenging the pricing of medical products and services, especially in
global markets, and their reimbursement practices may affect the price levels for Nexavar. In
addition, the market for Nexavar may be limited by third-party payors who establish lists of
approved products and do not provide reimbursement for products not listed. If Nexavar is not on
the approved lists, our sales may suffer. Changes in government legislation or regulation, such as
the Medicare Act in the United States, including Medicare Part D, or changes in private third-party
payors policies towards reimbursement for our products may reduce reimbursement of our product
costs and increase the amounts that patients have to pay themselves. There are also non-government
organizations that can influence the use of Nexavar and reimbursement decisions for Nexavar in the
United States and elsewhere. For example, the National Comprehensive Cancer Network, or NCCN, a
not-for-profit alliance of cancer centers has issued guidelines for the use of Nexavar in the
treatment of advanced kidney cancer and unresectable liver cancer. These guidelines may affect
treating physicians use of Nexavar in treatment-naïve advanced kidney and liver cancer patients.
Nexavars success in Europe and other regions will also depend largely on obtaining and maintaining
government reimbursement. For example, in Europe as in many
international markets, most patients will
not use prescription drugs that are not reimbursed by their governments. Negotiating prices with
governmental authorities can delay commercialization by twelve months or more. Even if
reimbursement is available, reimbursement policies may adversely affect our ability to sell our
products on a profitable basis. For example, in Europe as in many international markets,
governments control the prices of prescription pharmaceuticals and expect prices of prescription
pharmaceuticals to decline over the life of the product or as volumes increase. Further
reimbursement policies are subject to change due to economic, political or competitive factors. We
believe that this will continue into the foreseeable future as governments struggle with escalating
health care spending.
A number of additional factors may limit the market acceptance of products including the following:
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rate of adoption by healthcare practitioners; |
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treatment guidelines issued by government and non-government agencies; |
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types of cancer for which the product is approved; |
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rate of a products acceptance by the target population; |
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timing of market entry relative to competitive products; |
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availability of alternative therapies; |
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price of our product relative to alternative therapies; |
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extent of marketing efforts by us and third-party distributors or agents retained by
us; and |
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side effects or unfavorable publicity concerning our products or similar products. |
If Nexavar or any future product candidates that we may develop do not achieve market acceptance,
we may not realize sufficient revenues from product sales, which may cause our stock price to
decline.
21
Our clinical trials could take longer to complete than we project or may not be completed at all.
Although, for planning purposes, we project the commencement, continuation and completion of
ongoing clinical trials, the actual timing of these events may be subject to significant delays
relating to various causes, including actions by Bayer, scheduling conflicts with participating
clinicians and clinical institutions, difficulties in identifying and enrolling patients who meet
trial eligibility criteria and shortages of available drug supply. We may not complete clinical
trials involving Nexavar as projected or at all.
We and Bayer are launching a broad, multinational Phase 2 program in advanced breast and other
cancers. The breast cancer program is being coordinated primarily by Onyx and designed and led by
an international group of experts in the field of breast cancer and includes multiple randomized
Phase 2 trials. We may not have the necessary capabilities to successfully manage the execution and
completion of these planned clinical trials in a way that leads to approval of Nexavar for the
target indication. In addition, we rely on Bayer, academic institutions, cooperative oncology
organizations and clinical research organizations to conduct, supervise or monitor the majority of
clinical trials involving Nexavar. We have less control over the timing and other aspects of these
clinical trials than if we conducted them entirely on our own. Failure to commence or complete, or
delays in our planned clinical trials would prevent us from commercializing Nexavar in indications
other than kidney cancer and liver cancer, and thus seriously harm our business.
If serious adverse side effects are associated with Nexavar, approval for Nexavar could be revoked,
sales of Nexavar could decline, and we may be unable to develop Nexavar as a treatment for other
types of cancer.
The FDA-approved package insert for Nexavar for the treatment of patients with advanced kidney
cancer and unresectable liver cancer includes several warnings relating to observed adverse
reactions. These include, but are not limited to, cardiac ischemia and/or infarction; incidence of
bleeding; hypertension which may occur early in the therapy; hand-foot skin reaction and rash; and
some instances of gastrointestinal perforations. Other treatment-emergent adverse reactions
observed in patients taking Nexavar include, but are not limited to, diarrhea, fatigue, abdominal
pain, weight loss, anorexia, alopecia, nausea and vomiting. With continued and potentially expanded
commercial use of Nexavar and additional clinical trials of Nexavar, we and Bayer anticipate we
will routinely update adverse reactions listed in the package insert to reflect current
information. For example, subsequent to the initial FDA approval, we and Bayer updated the package
insert to include additional information on new adverse reactions reported by physicians using
Nexavar. If additional adverse reactions emerge, or a pattern of severe or persistent previously
observed side effects is observed in the Nexavar patient population, the FDA or other international
regulatory agencies could modify or revoke approval of Nexavar or we may choose to withdraw it from
the market. If this were to occur, we may be unable to obtain approval of Nexavar in additional
indications and foreign regulatory agencies may decline to approve Nexavar for use in any
indication. Any of these outcomes would have a material adverse impact on our business. In
addition, if patients receiving Nexavar were to suffer harm as a result of their use of Nexavar,
these patients or their representatives may bring claims against us. These claims, or the mere
threat of these claims, could have a material adverse effect on our business and results of
operations.
We are subject to extensive government regulation, which can be costly, time consuming and subject
us to unanticipated delays.
Drug candidates under development and approved for marketing are subject to extensive and rigorous
domestic and foreign regulation. We have received regulatory approval for the use of Nexavar in the
treatment of advanced kidney and liver cancer in the United States, the European Union and a number
of foreign markets, and we are developing Nexavar for several additional indications.
We rely on Bayer to manage communications with regulatory agencies, including filing new drug
applications and generally directing the regulatory processes for Nexavar. We and Bayer may not
obtain necessary additional approvals from the FDA or other regulatory authorities. If we fail to
obtain required governmental approvals, we will experience delays in or be precluded from marketing
Nexavar in particular indications or countries. The FDA or other regulatory authorities may approve
only limited label information for the product. The label information describes the indications and
methods of use for which the product is authorized, and if overly restrictive, may limit our and
Bayers ability to successfully market any approved product. If we have disagreements as to
ownership of clinical trial results or regulatory
22
approvals, and the FDA
refuses to recognize us as holding, or having access to, the regulatory approvals necessary to
commercialize our product candidates, we may experience delays in or be precluded from marketing
products.
The regulatory review and approval process takes many years, requires the expenditure of
substantial resources, involves post-marketing surveillance and may involve ongoing requirements
for post-marketing studies. Additional or more rigorous governmental regulations may be promulgated
that could delay regulatory approval of Nexavar. Delays in obtaining regulatory approvals would
adversely affect the successful commercialization of Nexavar.
After Nexavar and any other products we may develop are marketed, the products and their
manufacturers are subject to continual review. Later discovery of previously unknown problems with
Nexavar or manufacturing and production by Bayer or other third parties may result in restrictions
on Nexavar, including withdrawal of Nexavar from the market. In addition, problems or failures with
the products of others, before or after regulatory approval, including our competitors, could have
an adverse effect on our ability to obtain or maintain regulatory approval for Nexavar. If we fail
to comply with applicable regulatory requirements, we could be subject to penalties, including
fines, suspensions of regulatory approval, product recall, seizure of products and criminal
prosecution.
We are dependent on the efforts of Bayer to market and promote Nexavar.
Under our collaboration and co-promotion agreements with Bayer, we and Bayer are co-promoting
Nexavar in the United States.
We do not, however, have the right to co-promote Nexavar in any country outside the United States,
and we are dependent solely on Bayer to promote Nexavar in foreign countries where Nexavar is
approved. In all foreign countries, except Japan, Bayer will first receive a portion of the product
revenues to repay Bayer for its foreign commercialization infrastructure, before determining our
share of profits and losses. In Japan, we receive a single-digit royalty on any sales of Nexavar.
We have limited ability to direct Bayer in its promotion of Nexavar in foreign countries where
Nexavar is approved. Bayer may not have sufficient experience to promote oncology products in
foreign countries and may fail to devote appropriate resources to this task. If Bayer fails to
adequately promote Nexavar in foreign countries, we may be unable to obtain any remedy against
Bayer. If this were to happen, sales of Nexavar in any foreign countries where Nexavar is approved
may be harmed, which would negatively impact our business.
Similarly, Bayer may establish a sales and marketing infrastructure for Nexavar outside the United
States that is too large and expensive in view of the magnitude of the Nexavar sales opportunity or
establish this infrastructure too early in view of the ultimate timing of potential regulatory
approvals. Since we share in the profits and losses arising from sales of Nexavar outside of the
United States, rather than receiving a royalty (except in Japan), we are at risk with respect to
the success or failure of Bayers commercial decisions related to Nexavar as well as the extent to
which Bayer succeeds in the execution of its strategy.
We are dependent on the efforts of and funding by Bayer for the development Nexavar.
Under the terms of the collaboration agreement, we and Bayer must agree on the development plan for
Nexavar. If we and Bayer cannot agree, clinical trial progress could be significantly delayed or
halted. Further, if we or Bayer cease funding development of Nexavar under the collaboration
agreement, then that party will be entitled to receive a royalty, but not to share in profits.
Bayer could, upon 60 days notice, elect at any time to terminate its co-funding of the development
of Nexavar. If Bayer terminates its co-funding of Nexavar development, we may be unable to fund the
development costs on our own and may be unable to find a new collaborator, which could cause our
business to fail.
We do not have manufacturing expertise or capabilities and are dependent on Bayer to fulfill our
manufacturing needs, which could result in lost sales and the delay of clinical trials or
regulatory approval.
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Under our collaboration agreement with Bayer, Bayer has the manufacturing responsibility to supply
Nexavar for clinical trials and to support our commercial requirements. However, should Bayer give
up its right to co-develop Nexavar, we would have to manufacture Nexavar, or contract with another
third party to do so for us. We lack the resources, experience and capabilities to manufacture
Nexavar or any future product candidates on our own and would require substantial funds to
establish these capabilities. Consequently, we are, and expect to remain, dependent on third
parties to manufacture our product candidates and products. These parties may encounter
difficulties in production scale-up, including problems involving production yields, quality
control and quality assurance and shortage of qualified personnel. These third parties may not
perform as agreed or may not continue to manufacture our products for the time required by us to
successfully market our products. These third parties may fail to deliver the required quantities
of our products or product candidates on a timely basis and at commercially reasonable prices.
Failure by these third parties could impair our ability to meet the market demand for Nexavar, and
could delay our ongoing clinical trials and our applications for regulatory approval. If these
third parties do not adequately perform, we may be forced to incur additional expenses to pay for
the manufacture of products or to develop our own manufacturing capabilities.
If Bayers business strategy changes, it may adversely affect our collaborative relationship.
Bayer may change its business strategy. Decisions by Bayer to either reduce or eliminate its
participation in the oncology field, or to add competitive agents to its portfolio, could reduce
its financial incentive to promote Nexavar. A change in Bayers business strategy may adversely
affect activities under its collaboration agreement with us, which could cause significant delays
and funding shortfalls impacting the activities under the collaboration and seriously harming our
business.
We have a history of losses, and we may continue to incur losses.
Our net loss for the years ended December 31, 2007, 2006 and 2005 was $34.2 million, $92.7 million
and $95.2 million, respectively. As of June 30, 2008, we had an accumulated deficit of
approximately $452.8 million. We have incurred these losses principally from costs incurred in our
research and development programs, from our general and administrative costs and the development of
our commercialization infrastructure. We may continue to incur operating losses as we and Bayer
expand our development and commercial activities.
We have made significant expenditures towards the development and commercialization of Nexavar and
may never realize sufficient product sales to offset these expenditures. Our ability to achieve and
maintain consistent profitability depends upon success by us and Bayer in marketing the approved
product, completing development of Nexavar and obtaining the required regulatory approvals.
If we lose our key employees and consultants or are unable to attract or retain qualified
personnel, our business could suffer.
The loss of the services of key employees may have an adverse impact on our business unless or
until we hire a suitably qualified replacement. We do not maintain key person life insurance on any
of our officers, employees or consultants. Any of our key personnel could terminate their
employment with us at any time and without notice. We depend on our continued ability to attract,
retain and motivate highly qualified personnel. We face competition for qualified individuals from
numerous pharmaceutical and biotechnology companies, universities and other research institutions.
If we resume our research and development of product candidates other than Nexavar, we will need to
hire individuals with the appropriate scientific skills. If we cannot hire these individuals in a
timely fashion, we will be unable to engage in new product candidate discovery activities.
We may need additional funds, and our future access to capital is uncertain.
24
We may need additional funds to conduct the costly and time-consuming clinical trials necessary to
develop Nexavar for additional indications, pursue regulatory approval, commercialize Nexavar in
Europe and the rest of the world and acquire rights to additional product candidates. Our future
capital requirements will depend upon a number of factors, including:
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revenue from our product sales; |
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global product development and commercialization activities; |
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the cost involved in enforcing patent claims against third parties and defending
claims by third parties; |
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the costs associated with acquisitions or licenses of additional products; |
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competing technological and market developments; and |
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repayment of our of milestone-based advances. |
We may not be able to raise additional capital on favorable terms, or at all. If we are unable to
obtain additional funds, we may not be able to fund our share of commercialization expenses and
clinical trials. We may also have to curtail operations or obtain funds through collaborative and
licensing arrangements that may require us to relinquish commercial rights or potential markets or
grant licenses on terms that are unfavorable to us.
We believe that our existing capital resources and interest thereon will be sufficient to fund our
current development plans beyond 2009. However, if we change our development plans, acquire rights
to or license additional products or if Nexavar is not accepted in the marketplace, we may need
additional funds sooner than we expect. In addition, we anticipate that our share of expenses under
our collaboration with Bayer may increase over the next several years as we continue our share of
funding for the Nexavar clinical development program and expansion of commercial activities for
Nexavar throughout the world. While these costs are unknown at the current time, we may need to
raise additional capital to continue the co-funding of the Nexavar program through and beyond 2009.
If the specialty pharmacies and distributors that we and Bayer rely upon to sell our products fail
to perform, our business may be adversely affected.
Our success depends on the continued customer support efforts of our network of specialty
pharmacies and distributors. A specialty pharmacy is a pharmacy that specializes in the dispensing
of medications for complex or chronic conditions, which often require a high level of patient
education and ongoing management. The use of specialty pharmacies and distributors involves certain
risks, including, but not limited to, risks that these specialty pharmacies and distributors will:
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not provide us with accurate or timely information regarding their inventories, the
number of patients who are using Nexavar or complaints about Nexavar; |
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not effectively sell or support Nexavar; |
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reduce their efforts or discontinue to sell or support Nexavar; |
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not devote the resources necessary to sell Nexavar in the volumes and within the
time frames that we expect; |
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be unable to satisfy financial obligations to us or others; and |
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cease operations. |
Any such failure may result in decreased product sales and profits, which would harm our business.
We or Bayer may not be able to protect our intellectual property, which gives us the power to
exclude third parties from using Nexavar, or we may not be able to operate our business without
infringing upon the intellectual property rights of others.
We can protect our technology from unauthorized use by others only to the extent that our
technology is covered by valid and enforceable patents or effectively maintained as trade secrets.
As a result, we depend in part on our ability to:
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obtain patents; |
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license technology rights from others; |
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protect trade secrets; |
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operate without infringing upon the proprietary rights of others; and |
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prevent others from infringing on our proprietary rights. |
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In the case of Nexavar, the global patent applications related to this product candidate are held
by Bayer, but licensed to us in conjunction with our collaboration agreement with Bayer. Bayer has
a United States Patent that covers pharmaceutical compositions of Nexavar which will expire in
2022. Based on a review of the public patent databases, Bayer also has a
European Patent that covers Nexavar, which will expire in 2020. Bayer has other patent applications
that are pending worldwide that cover Nexavar alone or in combination with other drugs for treating
cancer. Certain of these patents may be subject to possible patent-term extensions, either in the
U.S. or abroad, the entitlement to and the term of which cannot presently be calculated, in part
because Bayer does not share with us information related to its Nexavar patent portfolio. As of
June 30, 2008, we owned or had licensed rights to 60 United States patents and 27 United States
patent applications and, generally, the foreign counterparts of these filings. Most of these
patents or patent applications cover protein targets used to identify product candidates during the
research phase of our collaborative agreements with Warner-Lambert Company, now Pfizer, or Bayer,
or aspects of our now discontinued virus program. Additionally, we have corresponding patents or
patent applications pending or granted in certain foreign jurisdictions.
The patent positions of biotechnology and pharmaceutical companies are highly uncertain and involve
complex legal and factual questions. Our patents, or patents that we license from others, may not
provide us with proprietary protection or competitive advantages against competitors with similar
technologies. Competitors may challenge or circumvent our patents or patent applications. Courts
may find our patents invalid. Due to the extensive time required for development, testing and
regulatory review of our potential products, our patents may expire or remain in existence for only
a short period following commercialization, which would reduce or eliminate any advantage the
patents may give us.
We may not have been the first to make the inventions covered by each of our issued or pending
patent applications, or we may not have been the first to file patent applications for these
inventions. Competitors may have independently developed technologies similar to ours. We may need
to license the right to use third-party patents and intellectual property to develop and market our
product candidates. We may not acquire required licenses on acceptable terms, if at all. If we do
not obtain these required licenses, we may need to design around other parties patents, or we may
not be able to proceed with the development, manufacture or, if approved, sale of our product
candidates. We may face litigation to defend against claims of infringement, assert claims of
infringement, enforce our patents, protect our trade secrets or know-how, or determine the scope
and validity of others proprietary rights. In addition, we may require interference proceedings
declared by the United States Patent and Trademark Office to determine the priority of inventions
relating to our patent applications. These activities, especially patent litigation, are costly.
Bayer may have rights to publish data and information in which we have rights. In addition, we
sometimes engage individuals, entities or consultants to conduct research that may be relevant to
our business. The ability of these individuals, entities or consultants to publish or otherwise
publicly disclose data and other information generated during the course of their research is
subject to certain contractual limitations. The nature of the limitations depends on various
factors, including the type of research being conducted, the ownership of the data and information
and the nature of the individual, entity or consultant. In most cases, these individuals, entities
or consultants are, at the least, precluded from publicly disclosing our confidential information
and are only allowed to disclose other data or information generated during the course of the
research after we have been afforded an opportunity to consider whether patent and/or other
proprietary protection should be sought. If we do not apply for patent protection prior to
publication or if we cannot otherwise maintain the confidentiality of our technology and other
confidential information, then our ability to receive patent protection or protect our proprietary
information will be harmed.
Limited foreign intellectual property protection and compulsory licensing could limit our revenue
opportunities.*
The laws of some foreign countries do not protect intellectual property rights to the same extent
as the laws of the United States. Some companies have encountered significant problems in
protecting and defending such rights in foreign jurisdictions. Many countries, including certain
countries in Europe and developing countries, have compulsory licensing laws under which a patent
owner may be compelled to grant licenses to third parties. In those countries, Bayer, the owner of
the Nexavar patent estate, may have limited remedies if the Nexavar patents are infringed or if
Bayer is compelled to grant a license of Nexavar to a third party, which could materially diminish
the value of those patents that cover Nexavar. If compulsory licenses were extended to include
Nexavar, this could limit our potential revenue opportunities. Moreover, the legal systems of
certain countries, particularly certain developing countries, do not favor the aggressive
enforcement of patent and other intellectual property protection, which may make it difficult to
stop infringement. Many countries limit the enforceability of patents against government agencies
or government contractors. These factors could also negatively affect our revenue opportunities in
those countries.
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We may incur significant liability if it is determined that we are promoting the off-label use of
drugs or are otherwise found in violation of federal and state regulations in the United States or
elsewhere.
Physicians may prescribe drug products for uses that are not described in the products labeling
and that differ from those approved by the FDA or other applicable regulatory agencies. Off-label
uses are common across medical specialties. Physicians may prescribe Nexavar for the treatment of
cancers other than advanced kidney cancer or liver cancer, although neither we nor Bayer are
permitted to promote Nexavar for the treatment of any indication other than advanced kidney cancer
or liver cancer. The FDA and other regulatory agencies have not approved the use of Nexavar for any
other indications. Although the FDA and other regulatory agencies do not regulate a physicians
choice of treatments, the FDA and other regulatory agencies do restrict communications on the
subject of off-label use. Companies may not promote drugs for off-label uses. Accordingly, prior to
approval of Nexavar for use in any indications other than advanced kidney cancer or liver cancer,
we may not promote Nexavar for these indications. The FDA and other regulatory agencies actively
enforce regulations prohibiting promotion of off-label uses and the promotion of products for which
marketing clearance has not been obtained. A company that is found to have improperly promoted
off-label uses may be subject to significant liability, including civil and administrative remedies
as well as criminal sanctions.
Notwithstanding the regulatory restrictions on off-label promotion, the FDA and other regulatory
authorities allow companies to engage in truthful, non-misleading, and non-promotional speech
concerning their products. We engage in the support of medical education activities and communicate
with investigators and potential investigators regarding our clinical trials. Although we believe
that all of our communications regarding Nexavar are in compliance with the relevant regulatory
requirements, the FDA or another regulatory authority may disagree, and we may be subject to
significant liability, including civil and administrative remedies as well as criminal sanctions.
We face product liability risks and may not be able to obtain adequate insurance.
The sale of Nexavar and its ongoing use in clinical trials exposes us to liability claims. Although
we are not aware of any historical or anticipated product liability claims against us, if we cannot
successfully defend ourselves against product liability claims, we may incur substantial
liabilities or be required to limit commercialization of Nexavar.
We believe that we have obtained reasonably adequate product liability insurance coverage that
includes the commercial sale of Nexavar and our clinical trials. However, the cost of insurance
coverage is rising. We may not be able to maintain insurance coverage at a reasonable cost. We may
not be able to obtain additional insurance coverage that will be adequate to cover product
liability risks that may arise should a future product candidate receive marketing approval.
Regardless of merit or eventual outcome, product liability claims may result in:
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decreased demand for a product; |
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injury to our reputation; |
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withdrawal of clinical trial volunteers; and |
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loss of revenues. |
Thus, whether or not we are insured, a product liability claim or product recall may result in
significant losses.
If we do not receive timely and accurate financial and market information from Bayer regarding the
development and sale of Nexavar, we may be unable to accurately report our results of operations.
Due to our collaboration with Bayer, we are highly dependent on Bayer for timely and accurate
information regarding the costs incurred in developing and selling Nexavar, and any revenues
realized from its sale, in order to accurately report our results of operations. If we do not
receive timely and accurate information or incorrectly estimate activity levels associated with the
co-promotion and development of Nexavar at a given point in time, we could record significant
additional expense in future periods and may be required to restate our results for prior periods.
Such inaccuracies or restatements could cause a loss of investor confidence in our financial
reporting or lead to claims against us, resulting in a decrease in the trading price of shares of
our common stock.
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Provisions in our collaboration agreement with Bayer may prevent or delay a change in control.
Our collaboration agreement with Bayer provides that if Onyx is acquired by another entity by
reason of merger, consolidation or sale of all or substantially all of our assets, and Bayer does
not consent to the transaction, then for 60 days following the transaction, Bayer may elect to
terminate Onyxs co-development and co-promotion rights under the collaboration agreement. If Bayer
were to exercise this right, Bayer would gain exclusive development and marketing rights to the
product candidates developed under the collaboration agreement, including Nexavar. If this happens,
Onyx, or the successor to Onyx, would receive a royalty based on any sales of Nexavar and other
collaboration products, rather than a share of any profits which could substantially reduce the
economic value derived from the sales of Nexavar to Onyx or its successor. These provisions of our
collaboration agreement with Bayer may have the effect of delaying or preventing a change in
control, or a sale of all or substantially all of our assets, or may reduce the number of companies
interested in acquiring Onyx.
Our stock price is volatile.
Our stock price is volatile and is likely to continue to be volatile. In the period beginning
January 1, 2004 and ending June 30, 2008, our stock price ranged from a high of $59.50 and a low of
$10.44. A variety of factors may have a significant affect on our stock price, including:
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fluctuations in our results of operations; |
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interim or final results of, or speculation about, clinical trials of Nexavar, such
as the announcement that we and Bayer had stopped the Phase 3 clinical trial of Nexavar
in combination with carboplatin and paclitaxel in patients with NSCLC; |
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decision by regulatory agencies, or changes in regulatory requirements; |
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ability to accrue patients into clinical trials; |
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developments in our relationship with Bayer; |
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public concern as to the safety and efficacy of our product candidates; |
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changes in healthcare reimbursement policies; |
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announcements by us or our competitors of technological innovations or new
commercial therapeutic products; |
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government regulation; |
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developments in patent or other proprietary rights or litigation brought against us; |
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sales by us of our common stock or debt securities, including sales under our
committed equity financing facility arrangement with Azimuth; |
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foreign currency fluctuations, which would affect our share of collaboration profits
or losses; and |
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general market conditions. |
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Existing stockholders have significant influence over us.
Our executive officers, directors and 5% stockholders own, in the aggregate, approximately 24% of
our outstanding common stock. As a result, these stockholders will be able to exercise substantial
influence over all matters requiring stockholder approval, including the election of directors and
approval of significant corporate transactions. This could have the effect of delaying or
preventing a change in control of our company and will make some transactions difficult or
impossible to accomplish without the support of these stockholders.
Bayer, a collaborative party, has the right, which it is not currently exercising, to have its
nominee elected to our board of directors as long as we continue to collaborate on the development
of a compound. Because of these rights, ownership and voting arrangements, our officers, directors,
principal stockholders and collaborator may be able to effectively control the election of all
members of the board of directors and determine all corporate actions.
A portion of our investment portfolio is invested in auction rate securities, and if auctions
continue to fail for amounts we have invested, our investment will not be liquid. If the issuer of
an auction rate security that we hold is unable to successfully close future auctions and their
credit rating deteriorates, we may be required to adjust the carrying value of our investment
through an impairment charge to earnings.*
A portion
of our investment portfolio is invested in auction rate securities. The underlying assets
of these securities are student loans substantially backed by the federal government. Due to
adverse developments in the credit markets, beginning in February 2008, these securities have
experienced failures in the auction process. When an auction fails for amounts we have invested,
the security becomes illiquid. In the event of an auction failure, we are not able to access
these funds until a future auction on these securities is successful. We have reclassified these
securities from current to non-current marketable securities, and if the issuer is unable to successfully
close future auctions and their credit rating deteriorates, we may be required to adjust the
carrying value of the marketable securities through an impairment charge to earnings.
We are at risk of securities class action litigation due to our expected stock price volatility.
In the past, stockholders have often brought securities class action litigation against a company
following a decline in the market price of its securities. This risk is especially acute for us,
because biotechnology companies have experienced greater than average stock price volatility in
recent years and, as a result, have been subject to, on average, a greater number of securities
class action claims than companies in other industries. In December 2006, following our
announcement that a Phase 3 trial administering Nexavar or placebo tablets in combination with the
chemotherapeutic agents carboplatin and paclitaxel in patients with advanced melanoma did not meet
its primary endpoint, our stock price declined significantly. Similarly, following our announcement
in February 2008 that one of our Phase 3 trials for non-small cell lung cancer had been stopped
because and independent DMC analysis concluded that it did not meet its primary endpoint of
improved overall survival, our stock price declined significantly. We may in the future be the
target of securities class action litigation. Securities litigation could result in substantial
costs, could divert managements attention and resources, and could seriously harm our business,
financial condition and results of operations.
Our operating results could be adversely affected by product sales occurring outside the United
States and fluctuations in the value of the United States dollar against foreign currencies.
A significant percentage of Nexavar sales are generated outside of the United States. Nexavar sales
and operating expenses denominated in foreign currencies could affect our operating results as
foreign currency exchange rates fluctuate. Changes in exchange rates between these foreign
currencies and the U.S. Dollar will affect the recorded levels of our assets and liabilities as
foreign assets and liabilities are translated into U.S. Dollars for presentation in our financial
statements, as well as our net sales, cost of goods sold, and operating margins. The primary
foreign currency in which we have exchange rate
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fluctuation exposure is the European Union Euro. As
we expand, we could be exposed to exchange rate fluctuation in other currencies. Exchange rates
between these currencies and U.S. Dollars have fluctuated significantly in recent years and may
do so in the future. Hedging foreign currencies can be difficult, especially if the currency is not
freely traded. We cannot predict the impact of future exchange rate fluctuations on our operating
results. We currently do not hedge any foreign currencies
Provisions in Delaware law, our charter and executive change of control agreements we have entered
into may prevent or delay a change of control.
We are subject to the Delaware anti-takeover laws regulating corporate takeovers. These
anti-takeover laws prevent Delaware corporations from engaging in a merger or sale of more than 10%
of its assets with any stockholder, including all affiliates and associates of the stockholder, who
owns 15% or more of the corporations outstanding voting stock, for three years following the date
that the stockholder acquired 15% or more of the corporations stock unless:
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the board of directors approved the transaction where the stockholder acquired 15%
or more of the corporations stock; |
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after the transaction in which the stockholder acquired 15% or more of the
corporations stock, the stockholder owned at least 85% of the corporations
outstanding voting stock, excluding shares owned by directors, officers and employee
stock plans in which employee participants do not have the right to determine
confidentially whether shares held under the plan will be tendered in a tender or
exchange offer; or |
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on or after this date, the merger or sale is approved by the board of directors and
the holders of at least two-thirds of the outstanding voting stock that is not owned by
the stockholder. |
As such, these laws could prohibit or delay mergers or a change of control of us and may discourage
attempts by other companies to acquire us.
Our certificate of incorporation and bylaws include a number of provisions that may deter or impede
hostile takeovers or changes of control or management. These provisions include:
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our board is classified into three classes of directors as nearly equal in size as
possible with staggered three-year terms; |
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the authority of our board to issue up to 5,000,000 shares of preferred stock and to
determine the price, rights, preferences and privileges of these shares, without
stockholder approval; |
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all stockholder actions must be effected at a duly called meeting of stockholders
and not by written consent; |
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special meetings of the stockholders may be called only by the chairman of the
board, the chief executive officer, the board or 10% or more of the stockholders
entitled to vote at the meeting; and |
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no cumulative voting. |
These provisions may have the effect of delaying or preventing a change in control, even at
stock prices higher than the then current stock price.
We have entered into change in control severance agreements with each of our executive officers.
These agreements provide for the payment of severance benefits and the acceleration of stock option
vesting if the executive officers employment is terminated within 24 months of a change in control
of Onyx. The change in control severance agreements may have the effect of preventing a change in
control.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
30
Item 4. Submission of Matters to a Vote of Security Holders
Our Annual Meeting of Stockholders was held on May 14, 2008. The results of the matters voted upon
at the meeting were:
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(a) |
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Both of the nominees of the Board of Directors were elected to serve until our annual
meeting of stockholders in 2011. The nominees were: Magnus Lundberg; 44,804,575 common
shares for, none against and 257,378 withheld; and N. Anthony Coles; 44,795,049 common
shares for, none against and 266,904 withheld. The term of office of directors Paul
Goddard, Ph.D, Antonio J. Grillo-Lopez, M.D., and Wendell Wierenga, Ph.D, continues until
our annual meeting of stockholders in 2009. The term of office of directors Corinne H.
Lyle and Thomas G. Wiggans, continues until our annual meeting of stockholders in 2010. |
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(b) |
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The stockholders approved the amendment to the Companys Equity Incentive Plan to
increase the aggregate number of shares of Common Stock authorized for issuance under the
plan by 3,100,000 shares: 35,616,759 common shares for, 2,912,011 against, 24,954
abstaining and 6,508,229 broker non-votes. |
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(c) |
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The stockholders ratified the selection by the Audit Committee of the Board of
Directors of Ernst &Young LLP as our independent registered public accounting firm for our
fiscal year ending December 31, 2008: 44,933,738 common shares for, 101,999 against and
26,215 abstaining. |
Item 5. Other Information
Not applicable.
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Item 6. Exhibits
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3.1 (1)
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Restated Certificate of Incorporation of the Company. |
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3.2 (2)
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Bylaws of the Company. |
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3.3 (3)
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Certificate of Amendment to Amended and Restated Certificate of Incorporation. |
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3.4 (4)
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Certificate of Amendment to Amended and Restated Certificate of Incorporation. |
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4.1
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Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4. |
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4.2 (1)
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Specimen Stock Certificate. |
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10.9 (6) + |
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Form of Onyx Pharmaceuticals, Inc.
Executive Change in Control Severance Benefits Agreement. |
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10.13 (5)
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2005 Equity Incentive Plan. |
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10.25(7) +
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Separation and Consulting Agreement between Onyx Pharmaceuticals, Inc. and
Gregory W. Schafer, dated June 23, 2008. |
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31.1 (8)
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Certification of Chief Executive Officer as required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. |
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31.2 (8)
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Certification of Principal Financial Officer as required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. |
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32.1 (8)
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Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities
Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18
of the United States Code (18 U.S.C. 1350). |
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+ |
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Management contract or compensatory plan. |
31
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(1) |
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Filed as an exhibit to the Companys Registration Statement on Form SB-2 (No. 333-3176-LA). |
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(2) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on May 25, 2007. |
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(3) |
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Filed as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000. |
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(4) |
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Filed as an exhibit to the Companys Registration Statement on Form S-3 (No. 333-134565)
filed on May 30, 2006. |
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(5) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on May 15, 2008 |
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(6) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 10, 2008. |
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(7) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 23, 2008. |
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(8) |
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This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not
deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference
into any filing of Onyx Pharmaceuticals, Inc. under the Securities Act of 1933, as amended or the
Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly
Report on Form 10-Q), irrespective of any general incorporation language contained in such filing. |
32
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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ONYX PHARMACEUTICALS, INC.
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Date: August 5, 2008 |
By: |
/s/ N. Anthony Coles
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N. Anthony Coles |
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President and Chief Executive Officer
(Principal Executive Officer) |
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Date: August 5, 2008 |
By: |
/s/ Gregory W. Schafer
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Gregory W. Schafer |
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Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer) |
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33
EXHIBIT INDEX
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3.1 (1)
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Restated Certificate of Incorporation of the Company. |
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3.2 (2)
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Bylaws of the Company. |
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3.3 (3)
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Certificate of Amendment to Amended and Restated Certificate of Incorporation. |
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3.4 (4)
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Certificate of Amendment to Amended and Restated Certificate of Incorporation. |
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4.1
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Reference is made to Exhibits 3.1, 3.2, 3.3 and 3.4. |
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4.2 (1)
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Specimen Stock Certificate. |
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10.9 (6) +
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Form of Onyx Pharmaceuticals, Inc. Executive Change in Control Severance
Benefits Agreement. |
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10.13 (5)
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2005 Equity Incentive Plan. |
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10.25
(7) +
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Separation and Consulting Agreement between Onyx Pharmaceuticals, Inc. and
Gregory W. Schafer, dated June 23, 2008. |
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31.1 (8)
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Certification of Chief Executive Officer as required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. |
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31.2 (8)
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Certification of Principal Financial Officer as required by Rule 13a-14(a) or
Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended. |
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32.1 (8)
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Certifications required by Rule 13a-14(b) or Rule 15d-14(b) of the Securities
Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18
of the United States Code (18 U.S.C. 1350). |
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+ |
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Management contract or compensatory plan. |
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(1) |
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Filed as an exhibit to the Companys Registration Statement on Form SB-2 (No. 333-3176-LA). |
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(2) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on May 25, 2007. |
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(3) |
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Filed as an exhibit to the Companys Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000. |
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(4) |
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Filed as an exhibit to the Companys Registration Statement on Form S-3 (No. 333-134565)
filed on May 30, 2006. |
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(5) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on May 15, 2008 |
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(6) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 10, 2008. |
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(7) |
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Filed as an exhibit to Onyxs Current Report on Form 8-K filed on June 23, 2008. |
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(8) |
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This certification accompanies the Quarterly Report on Form 10-Q to which it relates, is not
deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference
into any filing of Onyx Pharmaceuticals, Inc. under the Securities Act of 1933, as amended or the
Securities Exchange Act of 1934, as amended (whether made before or after the date of the Quarterly
Report on Form 10-Q), irrespective of any general incorporation language contained in such filing. |
34