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Onyx Pharmaceuticals, Inc. received a huge boost recently with the US Food and Drug Administration (FDA) approving the company’s multiple myeloma (MM) candidate, Kyprolis (carfilzomib). Kyprolis has been approved for use in treatment-experienced multiple myeloma patients (who have received at least two prior therapies, including Takeda/Johnson & Johnson’s (JNJ - Analyst Report) Velcade (bortezomib) and an immunomodulatory agent) and whose disease has progressed on or within 60 days of completion of the last therapy. Onyx Pharma’s shares were up more than 11.5% on the news.

Approval was based on results from a phase IIb study (003-A1). The indication for Kyprolis is based on response rate. We note that currently no data demonstrating an improvement in progression free survival or overall survival is available on Kyprolis.

Kyprolis’ approval, which came a few days before the target date of July 27, did not come as a huge surprise as, last month, the FDA’s Oncologic Drugs Advisory Committee had issued an opinion in favor of Kyprolis. While reviewing the application, the panel voted overwhelmingly (11-0) in favor of clearing Kyprolis. One panel member abstained from voting.

Immense Commercial Potential

Onyx Pharma has priced Kyprolis at $1,658 per vial, at a premium to Velcade. The price per 28-day cycle is $9,950 based on the dosing schedule in the label and assuming a 78 kilogram individual. The mean duration of treatment was 4.4 months in study 003-A1, which means treatment cost could reach $44,000.

According to the American Cancer Society, about 21,700 people in the US could be diagnosed with multiple myeloma in 2012 with 10,710 people expected to die from the disease. Onyx Pharma estimates that Kyprolis-eligible patients could be about 10,000 - 15,000 annually in the US. This represents significant commercial potential for the company.

The company has a dedicated 100 person oncology sales force in place for the launch. The Kyprolis sales force will call on about 2,000 physician offices and hospitals where a major part of Kyprolis-eligible patients are treated. The company expects the product to be available to order by August 1. As far as reimbursement and formulary coverage is concerned, Onyx Pharma expects coverage for about 80% of the indicated population.

While a miscellaneous J-code will be used for the time being, a Kyprolis specific Medicare J-code is expected in January 2014.

Kyprolis is currently in a phase III study (ASPIRE), which is being conducted to assess the clinical benefit of Kyprolis. The study is being conducted under the FDA’s Special Protocol Assessment (SPA) program.

The speedy approval of Kyprolis is a major positive for Onyx Pharma. Kyprolis’ approval should remove concerns about the company’s dependence on Nexavar for growth.

We currently have a Neutral recommendation on Onyx Pharma, which carries a Zacks #3 Rank (short-term Hold rating).

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