ONYX Pharmaceuticals Inc. (ONXX, Financial) filed Quarterly Report for the period ended 2009-03-31.
Onyx Pharmaceuticals Inc is developing innovative products for the treatment of cancer. ONYX Pharmaceuticals Inc. has a market cap of $1.47 billion; its shares were traded at around $25.86 with and P/S ratio of 7.5. ONYX Pharmaceuticals Inc. had an annual average earning growth of 1.3% over the past 5 years.
Research and development expenses were $28.8 million for the three months ended March 31, 2009, a net increase of $10.2 million, or 55%, from $18.6 million in the same period in 2008. The increase is primarily due to planned increases in the development program for Nexavar across additional tumor types, such as colorectal cancer and adjuvant liver cancer, and Onyxs costs to further develop ONX 0801. A significant portion of our research and development expenses, approximately 73% and 80% for the three months ended March 31, 2009 and 2008, respectively, relate to our cost sharing arrangement with Bayer and represents our share of the research and development costs incurred by Bayer for Nexavar. As a result of the cost sharing arrangement between us and Bayer for research and development costs, there was a net reimbursable amount of $16.2 million and $11.1 million due to Bayer for the three months ended March 31, 2009 and 2008, respectively. Such amounts were recorded based on invoices and estimates we receive from Bayer. When such invoices have not been received, we must estimate the amounts owed to Bayer based on discussions with Bayer. If we underestimate or overestimate the amounts owed to Bayer, we may need to adjust these amounts in a future period, which could have an effect on earnings in the period of adjustment.
Selling, general and administrative expenses were $22.0 million for the three months ended March 31, 2009, a net increase of $2.2 million, or 11%, from $19.8 million in the same period in 2008. This increase is primarily due to increased marketing and employee-related expenses to support Nexavars commercial growth, as well as increased employee-related expenses to support Onyxs growth. The quarter ended March 31, 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.
At March 31, 2009, we had cash, cash equivalents and current and non-current marketable securities of $467.1 million, compared to $458.0 million at December 31, 2008. The increase of $9.1 million was primarily attributable to net cash provided by operations of $2.5 million and net cash proceeds received from the issuance of common stock through stock option exercises of $5.2 million.
Our investment portfolio includes $45.0 million of AAA rated securities with an auction reset feature (auction rate securities) that are collateralized by student loans. In April 2009, $5.0 million in securities were redeemed at par and, accordingly, we classified them as current marketable securities in the accompanying unaudited balance sheet at March 31, 2009. Therefore, a remaining balance of $40.0 million of par value auction rate securities is currently outstanding in our investment portfolio. Since February 2008, these types of securities have experienced failures in the auction process. However, a limited number of these securities have been redeemed at par by the issuing agencies. 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. 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 our belief that the market for these student loan collateralized instruments may take in excess of twelve months to fully recover, we have classified the auction rate securities with a par value of $40.0 million as non-current marketable securities on the accompanying unaudited condensed balance sheet. We have determined the fair value to be $36.5 million for these securities, based on a discounted flow model, and have reduced the carrying value of these marketable securities by $3.5 million through accumulated other comprehensive income or loss instead of earnings because we have deemed the impairment of these securities to be temporary. Further adverse developments in the credit market could result in an impairment charge through earnings in the future. The discounted cash flow model used to value these securities is based on a specific term and liquidity assumptions. An increase in either of these assumptions could result in a $1.5 million decrease in value. Alternatively, a decrease in either of the assumptions could result in a $1.5 million increase in value.
Our investment portfolio includes $45.0 million of AAA rated auction rate securities collateralized by student loans. In April 2009, $5.0 million in securities were redeemed at par and, accordingly, we classified them as current marketable securities in the accompanying unaudited balance sheet at March 31, 2009. Therefore, a remaining balance of $40.0 million of par value auction rate securities is currently outstanding in our investment portfolio. Since February 2008, securities of this type have experienced failures in the auction process. However, a limited number of these securities have been redeemed at par by the issuing agencies. 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. 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 our belief that the market for these student loan collateralized instruments may take in excess of twelve months to fully recover, we have classified the auction rate securities with a par value of $40.0 million as non-current marketable securities on the accompanying unaudited condensed balance sheet. We have determined the fair value to be $36.5 million for these securities, based on a discounted cash flow model, and have reduced the carrying value of these marketable securities by $3.5 million through accumulated other comprehensive income or loss instead of earnings because we have deemed the impairment of these securities to be temporary.
Read the The complete ReportONXX is in the portfolios of Edward Owens of Vanguard Health Care Fund.
Onyx Pharmaceuticals Inc is developing innovative products for the treatment of cancer. ONYX Pharmaceuticals Inc. has a market cap of $1.47 billion; its shares were traded at around $25.86 with and P/S ratio of 7.5. ONYX Pharmaceuticals Inc. had an annual average earning growth of 1.3% over the past 5 years.
Highlight of Business Operations:
Revenue from collaboration agreement was $53.7 million and $48.9 million for the three months ended March 31, 2009 and 2008, respectively. The increase in revenue from collaboration agreement is primarily a result of increased net product revenue on sales of Nexavar as recorded by Bayer of $178.1 million for the three months ended March 31, 2009 as compared to $151.9 million for the three months ended March 31, 2008. The increase in net product revenue was offset by increased costs to sell, distribute and market Nexavar in countries around the world.Research and development expenses were $28.8 million for the three months ended March 31, 2009, a net increase of $10.2 million, or 55%, from $18.6 million in the same period in 2008. The increase is primarily due to planned increases in the development program for Nexavar across additional tumor types, such as colorectal cancer and adjuvant liver cancer, and Onyxs costs to further develop ONX 0801. A significant portion of our research and development expenses, approximately 73% and 80% for the three months ended March 31, 2009 and 2008, respectively, relate to our cost sharing arrangement with Bayer and represents our share of the research and development costs incurred by Bayer for Nexavar. As a result of the cost sharing arrangement between us and Bayer for research and development costs, there was a net reimbursable amount of $16.2 million and $11.1 million due to Bayer for the three months ended March 31, 2009 and 2008, respectively. Such amounts were recorded based on invoices and estimates we receive from Bayer. When such invoices have not been received, we must estimate the amounts owed to Bayer based on discussions with Bayer. If we underestimate or overestimate the amounts owed to Bayer, we may need to adjust these amounts in a future period, which could have an effect on earnings in the period of adjustment.
Selling, general and administrative expenses were $22.0 million for the three months ended March 31, 2009, a net increase of $2.2 million, or 11%, from $19.8 million in the same period in 2008. This increase is primarily due to increased marketing and employee-related expenses to support Nexavars commercial growth, as well as increased employee-related expenses to support Onyxs growth. The quarter ended March 31, 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.
At March 31, 2009, we had cash, cash equivalents and current and non-current marketable securities of $467.1 million, compared to $458.0 million at December 31, 2008. The increase of $9.1 million was primarily attributable to net cash provided by operations of $2.5 million and net cash proceeds received from the issuance of common stock through stock option exercises of $5.2 million.
Our investment portfolio includes $45.0 million of AAA rated securities with an auction reset feature (auction rate securities) that are collateralized by student loans. In April 2009, $5.0 million in securities were redeemed at par and, accordingly, we classified them as current marketable securities in the accompanying unaudited balance sheet at March 31, 2009. Therefore, a remaining balance of $40.0 million of par value auction rate securities is currently outstanding in our investment portfolio. Since February 2008, these types of securities have experienced failures in the auction process. However, a limited number of these securities have been redeemed at par by the issuing agencies. 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. 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 our belief that the market for these student loan collateralized instruments may take in excess of twelve months to fully recover, we have classified the auction rate securities with a par value of $40.0 million as non-current marketable securities on the accompanying unaudited condensed balance sheet. We have determined the fair value to be $36.5 million for these securities, based on a discounted flow model, and have reduced the carrying value of these marketable securities by $3.5 million through accumulated other comprehensive income or loss instead of earnings because we have deemed the impairment of these securities to be temporary. Further adverse developments in the credit market could result in an impairment charge through earnings in the future. The discounted cash flow model used to value these securities is based on a specific term and liquidity assumptions. An increase in either of these assumptions could result in a $1.5 million decrease in value. Alternatively, a decrease in either of the assumptions could result in a $1.5 million increase in value.
Our investment portfolio includes $45.0 million of AAA rated auction rate securities collateralized by student loans. In April 2009, $5.0 million in securities were redeemed at par and, accordingly, we classified them as current marketable securities in the accompanying unaudited balance sheet at March 31, 2009. Therefore, a remaining balance of $40.0 million of par value auction rate securities is currently outstanding in our investment portfolio. Since February 2008, securities of this type have experienced failures in the auction process. However, a limited number of these securities have been redeemed at par by the issuing agencies. 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. 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 our belief that the market for these student loan collateralized instruments may take in excess of twelve months to fully recover, we have classified the auction rate securities with a par value of $40.0 million as non-current marketable securities on the accompanying unaudited condensed balance sheet. We have determined the fair value to be $36.5 million for these securities, based on a discounted cash flow model, and have reduced the carrying value of these marketable securities by $3.5 million through accumulated other comprehensive income or loss instead of earnings because we have deemed the impairment of these securities to be temporary.
Read the The complete ReportONXX is in the portfolios of Edward Owens of Vanguard Health Care Fund.
