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ONYX Pharmaceuticals, Inc. Message Board

  • johnpapas893 johnpapas893 Dec 21, 2012 12:42 AM Flag

    Morgan Stanley

    Morgan Stanley
    December 20, 2012

    Survey Suggests Kyprolis on Track
    Our AlphaWise survey supports a solid Kyprolis launch with relatively broad use in relapsed/ refractory myeloma. However, our fundamental view is unchanged as we see stock performance increasingly tied to Kyprolis’ path into earlier lines of therapy (ASPIRE, etc) rather than near term launch trends Broad uptake in relapsed/refractory myeloma with
    physicians in our survey expecting to treat 94% of double Revlimid/Velcade experienced patients and 75% of all patients failing two or more lines of Velcade, which should support a solid launch. As expected, treatment rates for patients after a first Velcade relapse are materially lower at 36%.

    Base case valuation uses DCF based sum of the parts analysis that employs a blend of 10% discount rate for marketed products and 11% for Kyprolis given still higher commercial and execution risks.

    Bull Case $102

    Sum of the Parts New indications for Nexavar Kyprolis makes it to front line Nexavar: 5 year growth CAGR of ~6% assumes competition does not materialize in HCC and 1-2 additional indications are added to label with 2015 sales of $1.2B, which flow through at high incremental margins Kyprolis: ~$1.5B in peak sales with a significant contribution from front line use.

    Base Case $83

    Sum of the Parts Nexavar largely flat, Kyprolis Strong in Salvage Setting Nexavar: 5-year growth CAGR of -2.5% assumes continued RCC erosion, HCC sees moderate pressure from new entrants, and R&D and SG&A declines in the Nexavar collaboration. Costs savings more than offset revenue pressure Kyprolis: $1-1.3B in sales in patients that have failed initial therapy.

    Bear Case $54

    Sum of the Parts Significant competition for Nexavar in HCC, Kyprolis a niche drug Nexavar: 5 year growth CAGR of -6% assumes continued RCC erosion and HCC sees significant competition as competitive agents prove superior in H2H trials for Nexavar. R&D and SG&A cuts are not enough to offset revenue pressure Kyprolis: ~$500-700MM in sales but use remains largely in the niche of highly refractory patients.

    Sentiment: Strong Buy

 
ONXX
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