ML (the price action sure ain't neutral):
Ex-US sales drive growth, liver data offsets Torisel
Onyx reported stronger than expected 4Q06 Nexavar sales of $64 MM vs. our
estimate of $51 MM driven by more rapid than expected adoption outside the US
and a $5 MM one-time purchase in the US. Thus, we raised our estimates. Sales
in kidney cancer are likely to begin declining in 2H07 due to increased competition
from Wyeth’s Torisel, however positive data in liver cancer should help to maintain
growth of the drug. But, significant R&D and marketing expenses will prevent
profitability until 2010. Maintain our NEUTRAL.
Ex-US sales up $11 MM, growth may continue
Nexavar Ex-US sales increased to $29 MM in 4Q, based on more rapid adoption
in kidney cancer, offsetting slowing growth in the US. Based on US sales trends
and increasing competition, we estimate Ex-US sales could peak by mid-07,
shifting growth focus to liver cancer.
Kidney competition offset by liver data
Wyeth's Torisel could be approved in April, increasing competition in kidney
cancer and potentially taking share from Nexavar. Since the drug has a unique
mechanism vs. Nexavar, physicians may choose to use Torisel ahead of Nexavar,
which could reduce revenues. However, positive liver data expected to be
available at ASCO could result in appreciable off-label use, offsetting potential
share loss in kidney cancer. Specifically, we estimate liver revenues could reach
$40 MM, in 2007.
Raising revenues, EPS estimates
Due to faster then expected adoption of Nexavar Ex-US, and a larger than
expected market opportunity, we are increasing our EPS and revenue estimates.
Nexavar revenue rises to $297 MM from $269 MM in '07, to $334 MM from $269
MM in '08, and to $409 MM from $307 MM in '09. Our non-GAAP, ex-options
EPS loss decreases to ($0.95) from ($1.18) in '07, to ($0.87) from ($1.17) in '08,
and to ($0.36) from ($0.61) in ‘09. Although we expect higher Nexavar revenues,
significant R&D and marketing expenses will prevent profitability until 2010. |
