That's what happens when you say a you are 'not yet able to project 2008 financial results due to uncertain trends'. Onyx Pharmaceuticals, Inc. (Public, NASDAQ:ONXX) was a stockmaster pick back in 2006 when it traded below $12 a share. It's gone on an incredible ride since that time, but today, shares are just $10 away from a new 52-week low.
Ten dollars may sound like a ton of room to breathe, but considering shares were almost $60 last month, it's a huge drop.
So what went wrong?
Today Onyx reported a fourth-quarter net loss of $11.7 million, or 21 cents a share, including an employee stock-based compensation expense of $3.9 million, or 7 cents a share.
In the year-earlier quarter, Onyx posted a net loss of $20.7 million, or 47 cents a share.
The mean estimate of analysts polled by Thomson Financial was for earnings of 7 cents a share.
Slight miss.
Sales of the company's anti-cancer therapy drug, Nexavar, were $124.9 million for the quarter ended Dec. 31, representing a 96% increase from the $63.7 million in the same period of 2006.
Their drug Nexavar is a potential gold mine, which is why the Masters took interest in the 1st place. In collaboration with Bayer HealthCare Pharmaceuticals, Inc., Onyx is developing and marketing Nexavar(R) (sorafenib) tablets, a small molecule drug.
Nexavar is currently approved for the treatment of advanced kidney cancer and for the treatment of liver cancer. Additionally, Nexavar is being investigated in several ongoing trials in non-small cell lung cancer, melanoma, breast cancer and other tumor types.
Nexavar is approved in more than 60 countries for the treatment of patients with advanced kidney cancer. They were recently granted approval in a second indication, liver cancer, in the U.S. and E.U. As part of a broad development program. Nexavar is also currently being evaluated in pivotal trials in metastatic melanoma but the hope to treast lung cancer just hit a snag.
Onyx announced today that the late-stage study of Nexavar in lung cancer patients after an independent monitoring board concluded that the study had no chance to succeed.
Boom, 20% drop in shares, the end.
Onyx and Bayer are running additional lung cancer trials with Nexavar, including a second phase III study that combines the drug with a chemotherapy regimen commonly used in Europe. Monday's negative results, however, raise doubts about their outcomes.
The setback disappointed investors who've been hoping for a more positive outcome from the lung cancer study to further fuel Nexavar sales growth and push Onyx's stock price much higher.
Fellow Masters, let's watch the downgrades come in, let the stock fall lower, then think about making a position.
Article written by Mark Cheshier
Contributor to theStockMasters.com
If you liked this article, Mark also contributes to the Quant Method Newsletter, only available at WallstNewsletters.com.
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