SOUTH SAN FRANCISCO, Calif. ( TheStreet) -- Few investors expect Onyx Pharmaceuticals' (ONXX) carfilzomib -- a proteasome inhibitor, like Takeda's Velcade -- to receive FDA approval in July for the treatment of late-stage multiple myeloma.
After all, Onyx management disclosed late last year that FDA had concerns about whether the company's single-arm Phase IIb trial, upon which the carfilzomib approval filing was based, would be adequate for approval. Onyx asked FDA for a priority (six month) review, which the agency typically gives for drugs designed to satisfy urgent unmet medical needs. FDA instead assigned carfilzomib a standard ten-month regulatory clock.
Investors also question Onyx's decision to seek accelerated, or Subpart H, approval, which would be based on response rate (a surrogate endpoint) instead of a more robust survival benefit endpoint. Carfilzomib is also likely to undergo review by the FDA's challenging Oncologic Drugs Advisory Committee, or ODAC.
Does Onyx sound like a mess? Not to me. I view Onyx as a buy.Onyx's $2.4 billion market capitalization is low given that Nexavar -- marketed for kidney and liver cancer -- reached $1 billion in annual sales last year, enough to support the stock's current enterprise value. On top of the base business, Onyx also has an interesting R&D pipeline, including Nexavar in thyroid, breast, and late-stage lung cancer, novel molecules like carfilzomib, and roughly $500 million in net cash. Let's take a look at carfilzomib, the multiple myeloma drug that has lost the confidence of many investors. Onyx acquired carfilzomib when it purchased the privately held drug developer Proteolix in 2009. I have little doubt that carfilzomib is an effective multiple myeloma agent and will eventually be approved. The question is when. Most investors expect a delay, which mitigates the downside in Onyx's stock price should those fears be actualized. The FDA approval decision date is July 27th. An FDA approval on or before that date would be a major positive surprise. The 257-patient, single-arm Phase IIb trial of carfilzomib -- Study 003-A1 -- that supports Onyx's New Drug Application showed a 24% overall response rate in late-stage multiple myeloma. Management believes this compares favorably to the 11% response rate that would be expected had patients been treated with best supportive care.