A Valentine For Onyx

Onyx Pharmaceuticals is up big for the second day in a row. The stock nearly doubled yesterday on astronomical volume of 56,000,000 shares and today as I write this it's up almost 8% with more than 18,000,000 shares changing hands. So, what's up besides the stock?

Monday morning the company announced that its drug "Nexavar" extended the lives of patients with liver cancer in a late-stage clinical trial. In an interview with me from the BIO CEO and Investor Conference, Onyx's Chairman and CEO Hollings Renton would not reveal exactly how long the drug extended survival. The company plans to make a big splash with that information at ASCO--the big scientific, oncology conference in early June. In the meantime, the clinical trial has been halted so the patients who were getting the placebo along with chemo can switch to Nexavar. It's a pill and it doesn't have to be taken with traditional chemo which has so many lousy side effects.

Onyx and the German chemical and drug company, Bayer , are partners on Nexavar which is already on the market for kidney cancer. But Onyx shares had been under pressure until this week's explosion because Pfizer's kidney cancer drug, Sutent, had become more widely used. Pfizer is also testing Sutent on liver cancer.

Liver cancer is the fifth most common form of cancer, but its prevalence is growing in part because of the increased incidence (some say epidemic) of Hepatitis C which can lead to liver cancer. It's a relatively small market, but some analysts, nonetheless, are raising their Nexavar sales estimates based on yesterday's news. The companies plan to file for FDA approval of Nexavar for liver cancer as quickly as possible. Improving overall survival with a cancer drug is the gold standard, so even though we don't know the actual number of weeks or months the drug may have added the results should lead to a relatively fast FDA decision.

Bank of America today raised its price target on Onyx, while FBR cut its rating to the equivalent of a "sell". Some think the results bode well for the drug's performance against other cancers (Onyx is testing it on lung cancer). Others are clearly betting on Bayer or another company buying Onyx. CEO Renton gives the standard boiler-plate response about being happy with the partnership and focused on continuing to develop the drug and to deliver shareholder value, etc., etc. If there's going to be a deal though, the price is quickly going up: Onyx's market value is now more than $1.1 billion.

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