Onyx shares nearly double on drug study

Onyx Pharmaceuticals Inc.’s shares almost doubled Monday after the company said its only drug, Nexavar, helped patients with liver cancer stay alive longer.

Nexavar is already approved for kidney tumors. The drug worked so well in trials with liver cancer patients that Onyx and its marketing partner, Bayer, will seek clearance from U.S. and European regulators as soon as possible to sell Nexavar for the added use, Onyx Chief Medical Officer Henry Fuchs said in a conference call.

The drug, which competes with Pfizer Inc.’s Sutent, costs users about $4,500 a month, Onyx said. Nexavar had more than $100 million in sales during the first nine months of 2006. It could generate additional revenue of $220 million by 2010 if cleared for liver cancer, said George Farmer, an analyst with Wachovia Securities Inc. in New York.

“Investor perception of Onyx will shift more positively now that Nexavar has proven efficacy in an indication beyond renal cell carcinoma,” said Farmer, who is based in New York, in a note to clients Monday.

Shares of Emeryville, Calif.-based Onyx jumped $11.89 to $24.15. The biggest one-day increase before Monday was 23% on May 9, 1996, when Onyx began selling shares.

Nexavar is among a group of so-called targeted therapies that pinpoint actions within cells that lead to cancer, rather than using chemotherapy to kill tumors in a way that can harm neighboring tissue. Nexavar works by choking off the blood supply that feeds tumors.

Findings from the Nexavar trials, which compared the drug with a placebo in tests on 602 people, will be presented at the American Society of Clinical Oncology in June. Nexavar is also being tested for a range of cancers including non-small-cell lung cancer and breast cancer.

The tests’ outcome “increases our confidence that Nexavar can be a broadly applicable drug” for different types of cancer, said Hollings Renton, chairman and chief executive of Onyx.

Bayer, based in Leverkusen, Germany, and Onyx split development costs on Nexavar, and each company takes half the profit from the drug in the U.S., Onyx said. Bayer gets more than half of its revenue outside the U.S.

“We see a significant upside over our current opportunity in the kidney cancer market,” Renton said, although the company hasn’t made any public sales projections for Nexavar.

About 19,160 cases of liver cancer will be diagnosed in the U.S. this year, with most being in men, the American Cancer Society said on its website. About 85% are 45 to 85 years old.