Zacks_Analysts' Blog : Bayer/Onyx Announce Cancer Data - Analyst Blog

Bayer HealthCare, a unit of Bayer (BAYRY) and partner Onyx Pharmaceuticals, Inc. (ONXX) recently announced data from a pivotal phase III study (CORRECT: n=760) of  oncology candidate, regorafenib (BAY 73-4506). The study evaluated patients suffering from metastatic colorectal cancer (mCRC) whose disease had progressed even after treatments with the standard drugs for the disease.

The multicenter, randomized, double-blind, placebo-controlled study was conducted in North America, Europe, China, Japan and Australia. We note that the pivotal study was unveiled in late 2011 following the recommendation of an independent data monitoring committee to allow patients in the placebo arm to be treated with regorafenib.

Data from the study revealed that mCRC patients treated with regorafenib plus the best supportive care lived approximately six weeks (median overall survival of 6.4 months) longer than those treated with placebo and the best supportive care (median overall survival of 5 months), thereby improving overall survival by 29% and meeting the primary endpoint of the study. Moreover, regorafenib treatment also resulted in a significant improvement in progression-free survival.

However, the difference in objective response rate between the two cohorts was statistically insignificant. Furthermore, treatment with regorafenib resulted in adverse events such as fatigue, hand-foot skin reaction, diarrhea, anorexia, voice changes, hypertension, oral mucositis apart from rash/desquamation.

Bayer intends to seek approval for the candidate in the mCRC indication in 2012. If regorafenib hits the market then Bayer has to make royalty payments to the tune of 20% on global sales of the candidate to Onyx, per the agreement inked last year. (Please refer to Onyx and Bayer Bury the Hatchet for details).

Our Recommendation

Currently, we have a Neutral stance on Bayer in the long run. The company carries a Zacks #4 Rank (Sell rating) in the short run. We have a similar long-term stance on Onyx. However, Onyx’s shares carry a Zacks #3 Rank (Hold rating) in the short run.