That is the question the shorts should be asking themselves with a small float, definitive deal docs being drawn up, and no big seller they were banking on.
"The partnering discussions continue to advance," Cormack added. "In addition to evaluating economic terms, we have been focusing on the level of commitment by potential partners to a development plan for OGX-011. As we are presently drafting definitive agreements, we believe that we are on track to secure a development and commercialization partnership for OGX-011."
It has been widely reported that the Galleon Group is in the process of liquidating all of its funds and winding down its operations. The Galleon Group has verbally confirmed to OncoGenex management that it completed the liquidation of its entire position in OncoGenex on October 20, 2009.
Very nice assessement. I think Scott did a good job of tapping down the "market's" expectation that a partnering deal would most likely get done. Though he has been carefull not to peg it to any one month, he nonetheless soothed expectations by expressing that "definitive agreements were being drafted". He also, if one listened carefully stated they were fairly well along in the drafting of the agreements.
He did use the plural usage of agreement, but it is unclear to this observer whether OGXI is dealing primarily now with one "player" or whether they are still in the stage of having two main partners competing for the partnership. He spoke of this at the last conference.
My own expectations is that its likely a deal will be announced between Dec 15 - Jan 30. I also agree with you comments regarding the potential for a buyout...its still possible...probably not likely...but it cannot be be ruled out.
I would be interested in anyones estimate as to what the current short position is,. Did they use the Galleon sell off to cover did they pile on anticipating a Galleon instigated melt-down. Anyone with a unhedged short position is in a very uncofrtable position right now IMO.
short interest as of 10/31 comes out next week but as of mid Oct it was at 537,000. I agree that it will be quite interesting to see if the position has increased.
I agree also about comments about duration of negotiations. OGXI's stated goal of achieving a partnership this year may slip from their control, not because of a lack of desire by big pharma, but I would assume that Onco divisions of big pharma appear to move like giant sloths compared to a small and efficient management team such as OGXI. But even if there is a change in end date, it would probably be a slight change and, on balance, I hope the identity of the partner and the terms of the deal justify the wait.
Some may wonder why the partnership negotiations are taking so long. I've been involved in complex contract negotiations in a different field and in my experience you spend far more time waiting than talking. One side makes an offer which the other side has to review internally. After getting input from higher-ups, it formulates a counterproposal which the higher-ups also need to sign off on. It then presents that to the other side which goes through the same process, etc., through several rounds of counterproposals. I would think OGXI, because it's so small, can act quickly, but if there's a big pharma on the other side it could take many weeks to hear back from them on each counterproposal. And if OGXI is dealing with more than one big pharma the logistical problems grow exponentially. So I think the timing is really out of OGXI's hands.
As far as whether a buyout is off the table, Scott's comment that they're drafting definitive agreements that address not only economic issues but also the scope of the development commitment would certainly seem to suggest that. On the other hand, if a buyout was also being discussed I'm not sure he would mention that. And even if it's not being discussed, there's always the possibility of an eleventh hour offer that's too good to refuse.