Onyx’s Staying Power Tied to New Cancer Drug Carfilzomib

Almost all patients with multiple myeloma who survive initial treatment
eventually will relapse and require further therapy. That might be one of the
reasons the FDA is likely to quickly approve the Onyx (NASDAQ: ONXX ) cancer
drug carfilzomib, which is intended to treat patients with relapsed and
refractory multiple myeloma. The South San Francisco, Calif.-based biopharma
company recently submitted its New Drug Application for carfilzomib under an
accelerated approval process. When the drug eventually hits the market probably
sometime in 2012 it has the chance to give Onyx the financial oomph needed to
stop merely treading water and start putting up some positive earnings numbers.
Doing so would go a long way toward convincing investors that the company has
the staying power to justify their support. Onyx can only hope the FDA shares
the company's enthusiasm about the carfilzomib study results. The safety and
efficacy data accompanying the drug application are compelling, according to Ted
W. Love, M.D., the company's executive vice president, R&D and technical
operations. While important strides have been made in treating patients with
multiple myeloma in the last decade, this disease remains uniformly fatal,
underscoring the need for new treatment options," he added in a company news
release. Multiple myeloma is the second-most common hematologic cancer and
results from an abnormality of plasma cells, usually in the bone marrow. In the
United States, more than 50,000 people are living with multiple myeloma and
approximately 20,000 new cases are diagnosed annually. Worldwide, more than
180,000 people are living with multiple myeloma and approximately 86,000 new
cases are diagnosed annually. Onyx, which has a market capitalization of more
than $2 billion, has seen its share price ebb and flow since going public in
2002. ONXX hit an all-time high of nearly $56 in December 2007 but today trades
at just $33 after a little bump up on the carfilzomib filing. All in all, Onyx
is in a reasonably good cash position with $550 million on the books at the end
of the second quarter. The company garnered attention among investors in 2004
based on positive data for its advanced kidney cancer treatment Nexavar, which
was granted FDA approval in 2005. The drug later was approved for liver cancer,
and Onyx and its partner Bayer (PINK: BAYRY ) are now testing the drug for use
in other types of cancer, including breast, thyroid, colorectal and ovarian.
Bayer sells Nexavar, and Onyx gets a slice of the profits after Bayer's
expenses. Unfortunately, the revenue Onyx receives has been neutralized by the
company's operating expenses. Some investors are concerned that the Bayer-Onyx
collaboration is on shaky ground. In fact, Onyx has sued Bayer, contending that
a separate drug Bayer is developing for kidney cancer should be treated as part
of the companies' agreement, not as Bayer's alone. The two might straighten
out their differences and the Nexavar tree eventually might bear more fruit for
Onyx. But clearly, the company's future and the payoff for ONXX investors is
most likely riding on the success of carfilzomib.