Assistant

The impressive 2007 sales growth of cancer drug Nexavar, which increased 125 percent over the year before, was overshadowed by the early termination of an ongoing Phase III study of the drug in non-small-cell lung cancer (NSCLC) due to lack of efficacy, news that sent shares of Onyx Pharmaceuticals Inc. falling 26.4 percent.

Onyx and partner Bayer HealthCare Pharmaceuticals reported over the holiday weekend that a planned interim analysis of an ongoing pivotal trial testing Nexavar (sorafenib) in combination with carboplatin and paclitaxel indicated that the study would not meet its primary endpoint of overall survival. The trial's data monitoring committee also noted that higher mortality actually was observed in a subset of patients with squamous-cell carcinoma receiving Nexavar compared to those getting carboplatin and paclitaxel alone.

Shares of Emeryville, Calif.-based Onyx (NASDAQ:ONXX) fell $11.89 to close Tuesday at $33.09.

That NSCLC trial stands in stark contrast to the companies' liver cancer study, which almost exactly one year ago reported stellar Phase III data. Those results pushed Onyx's stock up nearly 100 percent to $24.15 and served as the basis for a supplemental new drug application that was approved in November. (See BioWorld Today, Feb. 13, 2007.)

Nexavar, which is designed to target RAF kinase, VEGFR-1, VEGFR-2, VEGFR-3, PDGFR-B, KIT and FLT-3, previously gained approval in kidney cancer.

While "we are obviously disappointed" by the NSCLC data, Onyx Chairman, President and CEO Hollings Renton said during a conference call, they "don't change our long-term outlook" for evaluating Nexavar, a multi-kinase inhibitor, across several tumor types. He called the drug a "cornerstone" of cancer treatment and stressed that there are "multiple avenues for future growth."

Beyond NSCLC, Nexavar is being evaluated both as a monotherapy and in combination treatment in metastatic melanoma (though it failed in a 2006 Phase III study) and breast cancer, and as an adjuvant therapy in kidney and liver cancers.

Onyx and Bayer reported third-quarter sales of Nexavar totaling $124.9 million, a 19 percent quarter-over-quarter increase. For the full year, sales reached $371.7 million. Onyx, which has a 50-50 profit-sharing agreement with Bayer in the U.S. and receives royalties on all ex-U.S. sales, declined to provide a 2008 sales outlook for Nexavar, and it was that lack of guidance that left some investors worried.

Analyst Howard Liang, of Boston-based Leerink Swann & Co., wrote in a research note that growth opportunities beyond kidney cancer and liver cancer "are now unclear," adding that the removal of the NSCLC market "would significantly reduce the earnings leverage that would have translated into [a] large upside in valuation."

The companies plan to review additional ongoing studies of Nexavar in NSCLC, including a Phase III European trial testing the drug in combination with gemcitabine and cisplatin, to determine whether there will be any impact or change to those protocols, such as amendments to patient eligibility, data points or sample size, said Hank Fuchs, chief medical officer.

Full results from the halted ESCAPE (Evaluation of Sorafenib, Carboplatin And Paclitaxel Efficacy in NSCLC) trial will be presented at an upcoming scientific conference. The study enrolled more than 900 patients who had not received any prior systemic cancer treatment and included both patients with nonsquamous-cell and squamous-cell cancer carcinomas. Patients were randomized to receive 400 mg of oral Nexavar twice daily or placebo, in addition to chemotherapy, for up to six cycles.

While interim results indicated that patients with squamous-cell cancer had the highest mortality rate, Onyx said that the limited efficacy seen in the nonsquamous-cell subset indicated that the trial still would not meet its endpoint upon the removal of the squamous-cell population, and that another trial designed to exclude squamous-cell patients likely would not meet its endpoint either.

At this point, Fuchs said in response to an analyst's question, "I don't think that additional data will really change the conclusion in an important way."

Nexavar's miss, however, provided a small up-tick to New York-based ImClone Systems Inc., which develops EGFR-inhibitor Erbitux. In September, ImClone and partner Bristol-Myers Squibb Co., also of New York, reported that Erbitux (cetuximab) met its overall survival endpoint in a Phase III NSCLC trial. No specific results were disclosed at that time, however, and analysts await data presented at this year's American Society of Clinical Oncology conference to see whether Erbitux bests South San Francisco-based Genentech Inc.'s Avastin on survival. (See BioWorld Today, Sept. 12, 2007.)

Nonetheless, shares of ImClone (NASDAQ:IMCL) rose 99 cents Tuesday to close at $40.05.

Beyond Avastin, the NSCLC market includes Tarceva (erlotinib) from Genentech and Melville, N.Y.-based OSI Pharmaceuticals Inc. Coming up in late-stage development is Pfizer Inc.'s Sutent (sunitinib malate), already a competitor in kidney cancer, which started a Phase III trial in NSCLC patients in September.

In its earnings call, Onyx reported a fourth-quarter net loss of $11.7 million, or 21 cents per share. While the firm anticipates possibly profitable quarters in 2008, executives said they are "not yet comfortable projecting profitability in '08."

As of Dec. 31, Onyx had cash, equivalents and long-term marketing securities totaling $469.7 million.