Priority Review for Bayer/Onyx

Bayer’s (BAYRY - Analyst Report) HealthCare unit and Onyx Pharmaceuticals (ONXX - Analyst Report) recently announced that they have received priority review for their oncology candidate, regorafenib, in the US.

Bayer had filed for Food and Drug Administration (FDA) approval in April 2012. Bayer is looking to get regorafenib approved for the treatment of metastatic colorectal cancer (mCRC) in patients whose disease has progressed despite prior treatment.

Priority review status means that the FDA will review the marketing application within 6 months instead of the standard 10 months. A response should be out in the fourth quarter of 2012.

Regorafenib’s approval would be a major boost for the companies. Onyx Pharma is entitled to receive a 20% royalty on any future worldwide net sales of regorafenib in oncology. Bayer and Onyx Pharma intend to co-promote regorafenib in the US. Bayer is also seeking regulatory approval for regorafenib in the EU.

We currently have a Neutral recommendation on both Bayer and Onyx Pharma. While Bayer carries a Zacks #4 Rank (short-term Sell rating), Onyx Pharma carries a Zacks #3 Rank (short-term Hold rating). Onyx Pharma has an important event coming up with the FDA expected to deliver its decision regarding the company’s marketing application for another oncology candidate, Kyprolis (carfilzomib).

The company received a significant boost recently with the FDA’s Oncologic Drugs Advisory Committee issuing a positive opinion for Kyprolis. The panel recommended the clearance of the candidate for the treatment of relapsed and refractory multiple myeloma in patients who have received at least two prior therapies. A final decision from the FDA should be out by July 27, 2012.