Onyx's Strong Quarter Bolsters New CEO
Tony Coles, the new CEO at
Onyx Pharmaceuticals
(ONXX)
, said the right things during his first quarterly conference call Tuesday. It helped that Onyx
blew away
consensus earnings estimates, with the company posting a profit of 27 cents a share, well above expectations for a loss of 6 cents a share.
Sales of Onyx's cancer drug Nexavar totaled $151.9 million in the quarter, which was previously announced by the company's partner, the German drug firm
Bayer
. It was higher-than-expected revenue from the Nexavar joint venture and sharply lower expenses during the quarter that helped Onyx post its impressive first-quarter profit.
And that's a very good way for Coles to
start his run
as CEO of Onyx because after the fourth-quarter of last year, investors (and, ahem, a certain Internet biotech columnist) were
that Nexavar's success, especially in the liver cancer market, was not being reflected in the company's bottom line.
For the first time since Nexavar was launched two years ago, Onyx gave meaningful financial guidance, calling for Nexavar sales in the range of $600 million to $650 million for 2008.
Nexavar sales totaled $372 million in 2007. The drug has several strong competitors in the kidney cancer market, including
Pfizer's
(PFE) - Get Report
Sutent and
Genentech's
(DNA)
Avastin, but pretty much as the liver cancer market to itself.
Several analysts on Tuesday's conference call sounded downright angry with this guidance, describing it as weak or even meaningless since Nexavar's first-quarter run rate gets the drug to $608 million already.
Let's cut Onyx some slack, shall we? Clearly, the Nexavar sales guidance is conservative, and as Coles said on the call, the forecast can easily be updated higher once the company gets more visibility into the second half of the year. Nexavar is being right now being launched across Asia, which is a very large liver cancer market but one that is hard to predict. This likely contributed to Onyx's decision to play it safe with Nexavar guidance.
Just as important as Nexavar sales guidance was the fact that Coles said many of the right things when it comes to managing expenses. Onyx now expects to break even or be profitable in 2008, which is something the company couldn't promise during the fourth-quarter conference call, the last under the old regime of Hollings Renton.
Consensus calls for Onyx to earn 32 cents a share in 2008.
Onyx shares closed Tuesday at $37.94.
Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
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