Nexavar Side Effect Affects Onyx Trading: BioBuzz
For technical reasons, David Peltier will take Adam Feuerstein's place on TSC Live this week. We've rescheduled the show for noon next Tuesday, Sept. 29, so keep sending in questions, which you can submit four ways: Email us tsclive@thestreet.com, post them on our Facebook page facebook.com/thestreet, Tweet us @thestreet_news with #tsclive, or post them on the live show page in the comments section. Be sure to bookmark the TSC Live page now.
EMERYVILLE, Calif. (
) -- I was puzzled to see
Onyx Pharmaceuticals
(ONXX)
open for trading lower this morning after the release of what appeared to be very strong data from the phase IIb study of Nexavar in metastatic breast cancer patients. I did some digging and it seems as if a concern with the drug's side effect profile did raise concerns amongst investors -- at least temporarily.
The headline from the Nexavar abstract released Sunday was the 2.3-month increase in progression-free survival, which I discussed this morning. (See item below.) However, 45% of Nexavar patients also experienced Grade 3-4 hand-foot syndrome compared to 13% for patients in the Xeloda-alone arm. (Hand-foot syndrome is painful sores and blisters on the hands and feet, with grade 3-4 representing moderate to severe cases.)
Morgan Stanley analyst Steve Harr highlighted the hand-foot syndrome side effect in a note to clients this morning, writing that it could be an issue for doctors and regulators and may cloud the drug's potential in breast cancer, especially as it relates to comparisons with Roche's Avastin. Harr has a sell rating on Onyx and a $34 price target.
"That's so annoying," retorted Cannacord Adams' biotech analyst George Farmer, in a phone conversation this afternoon. He wasn't dissing his fellow analyst Harr, but lamenting the fact that hand-foot syndrome is a well-known and understood side effect of Nexavar that has not deterred the drug's use as in kidney and liver cancer patients.
"In the real world, doctors will dose reduce Nexavar or take other preventative measures to mitigate the hand-foot syndrome which they couldn't do in the phase IIb study," says Farmer.
He believes the Nexavar breast cancer data are very strong and he expects Onyx and partner
Bayer
to start phase III studies next year.
"If you give Nexavar 35% of the total metastatic breast cancer market at peak, it adds another $1.5 billion in revenue above kidney and liver cancer," he says. Farmer has a buy rating on Onyx and a $42 price target.
Onyx shares recovered from the morning dip into the red and are now trading higher by just under 2% to $34.89.
Rose-Colored Math Required for BioCryst Bull Case
(At 12 pm EDT)
I understand that I'm now seen as the
BioCryst Pharmaceuticals
(BCRX) - Get Report
basher, but truly, I don't see how today's news of a
government request for a peramivir stockpile
can be viewed as anything other than a disappointment.
By my admittedly simple calculations, BioCryst at $10 is over-valued.
Let's assume that the U.S. government does indeed order 40,000 courses of the intravenous flu drug peramivir as an emergency stockpile. And let's also assume that BioCryst charges $2,000 per treatment course. That's an incredibly high price -- as high as I've heard any of the BioCryst uber-bulls predict.
Total value of that contract: $80 million.
Now, how much of that $80 million does the government allow BioCryst to keep as profit? Let's assume the government is being super generous, telling BioCryst that it can make a 90% profit margin on peramivir, which would be in line with the profit margins for the most successful small molecule drugs.
That means BioCryst would keep $72 million in the peramivir order as profits.
BioCryst has about 38 million shares outstanding, so that works out to $1.89 per share in profit. Call it $2 a share.
Now, is the government really going to allow BioCryst to charge $2,000 per treatment course of peramivir? Probably not. And is the government going to give BioCryst 90% profit margins on peramivir? Probably not, again. So, in reality, BioCryst will make far less on peramivir than $2 a share.
But won't foreign government purchase peramivir, too, now that the U.S. government has stepped up to the plate? I don't know, but let's assume they do. And let's also be wildly optimistic and assume that five foreign governments also pay $2,000 per treatment course for peramivir, buy 40,0000 treatment courses and allow BioCryst 90% profit margins.
If all those incredible fortuitous things happen, BioCryst shares are still not worth much more than $10 or so.
In reality, the peramivir stockpiling orders will be much smaller and less profitable to BioCryst than the stock's biggest bulls predicted. (Now we know why BioCryst
changed its disclosure statement
last week.) I don't see why this stock should be worth more than $5 or $6 a share, which is just above where the stock traded before the H1N1 flu bubble started to inflate.
The best thing that could happen to BioCryst bulls now is if the H1N1 flu virus mutates or becomes much more severe and we start to hear about a real rush of seriously ill patients into hospital intensive care units. Maybe if that happens, the government will double or triple its peramivir orders.
Still, hard to make a comfortable, confident bet on that happening.
Strong Showing for Onyx, Amgen at European Cancer Meeting
(At 7:35 AM EDT)
Detailed data released Sunday from the phase IIb study of
Onyx Pharmaceuticals'
(ONXX)
cancer drug Nexavar in metastatic breast cancer patients looks really strong.
Recall that in July, Onyx announced that Nexavar
extended progression-free survival (PFS)
in this study. Well, the actual PFS benefit for Nexavar is 2.3 months, according to the late-breaker abstract for the study released Sunday to attendees at the
European Society for Medical Oncology
(ESMO) meeting in Berlin.
This study enrolled a mixture of first-line and second-line metastatic breast cancer patients. The median PFS for Nexavar plus Xeloxa was 6.4 months compared to a PFS of 4.1 months for Xeloda alone. Xeloda is an oral cancer drug marketed by
Roche
.
Investors should view favorably any PFS benefit above two months in favor of Nexavar. This is the first study to demonstrate that an oral, targeted cancer drug could significantly improve time to tumor growth.
By comparison, the combination of
Roche's
Avastin and Xeloda improved PFS by 2.9 months compared to Xeloda alone in the previously presented Ribbon-1 study. This study enrolled only first-line metastatic breast cancer patients.
More details from the Nexavar study will be presented on Wednesday, including a breakdown of results between first-line and second-line patients. Nexavar, which Onyx co-markets with
Bayer
is already approved for the treatment of kidney cancer and liver cancer. The companies are moving ahead on other breast cancer studies in light of these new data.
Onyx shares closed Friday at $34.27
Amgen's Denosumab Cancer Data Positive
Cancer data from clinical trials of
Amgen's
(AMGN) - Get Report
experimental bone drug denosumab is also trickling out of the ESMO meeting in Berlin, and so far, the results look positive for the drug.
Denosumab did not cause an increase in tumor progression compared to Roche's Zometa in a phase III study of metastatic breast cancer patients, according to a late-breaker abstract available to attendees at the European Society for Medical Oncology (ESMO) meeting in Berlin.
What this means is that denosumab did not cause tumor growth in these advanced breast cancer patients -- an important safety hurdle that the drug appears to have cleared quite strongly.
Last July, Amgen reported that denosumab was superior to Zometa in
preventing fractures and other bone-related problems
-- the primary efficacy endpoint of this study. Additional details in the ESMO abstract from this weekend confirmed this finding.
Detailed data is also being presented this morning from a second denosumab cancer study, this one in patients with solid tumors (excluding breast and prostate cancer) and multiple myeloma. The
were previously reported by Amgen in August.
The median time to first on-study skeletal-related event was 20.6 months for denosumab compared to 16.3 months for Zometa. The non-inferior result demonstrated a strong trend in favor of denosumab but just missed statistical significance for superiority, with a p value of 0.06.
Denosumab is designed to prevent or delay the destruction of bone in cancer patients. When cancer spreads to the bone – known as a bone metastases -- the growing cancer cells weaken and destroy the bone around the tumor. This damage can result in a number of serious bone complications, collectively called skeletal related events.
-- Reported by Adam Feuerstein in Boston
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;
to send him an email.
