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OncoGenex Pharmaceuticals, Inc. Message Board

  • dr.kuvasz dr.kuvasz Dec 22, 2009 5:02 PM Flag

    OGXI Fundamentals Never Better

    My day job took me to a legal dispute in a mining operation in Northern Canada for the last two days. It was difficult to watch the market reaction on a blackberry. IT was extremely frustrating not to be able to participate in discussions on this board which I have always enjoyed for the respectful and informative posts.

    In my view, the fundamentals of OGXI have never been stronger. I've been a shareholder for many years and despite the market reaction this deal makes me extremely proud and confident in OGXI's future:

    1. OGXI has a clear runway for Phase III registration of 011 in two of the largest cancer markets without having to spend another dime.

    2. The deal is designed to provide maximum royalty stream at the backend to OGXI while attracting 60 million in upfront cash and minimizing royalty payouts on milestones. There is a misconception that 30 million needs to be paid out. That is wrong. That money goes to OGXI's burn rate in co development of 011 and avoids royalty taxation. That is the underlying strategy: take cash in and don't pay royalties. The term upfront payment was made instead of milestone to avoid royalty payments.

    3. Teva allows OGXI to grow as their potential oncology franchise and is a natural fit with their generic anticancer drugs including docetaxol.

    4. The high royalty stream into the mid20s is unheard of for a phase II compound which preserves a high likelihood of an acquisition with success of the drug. Such a high royalty stream makes OGXI a prime acquisition target.

    5. The deal allows for OGXI to have a clear runway to develop 427 into Phase II.

    6. OGXI and Teva are a perfect match as R and R indicated today. OGXI's 011 future is secured, they don't pay a dime for 011 in prostrate and lung, they got fair market value, and Teva has a record of successs, has generic docetaxel and less competition for resources.



    I can understand why there is a sell off by people buying low and hoping for buyout over short term. For long term investors like me there is nothing that is going to derail OGXI from Phase III tests in O11. And OGXI has world class scientists and doctors who will take them through those tests.

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    • Hey Dr. K, KEEP YOUR DAY JOB because your no fortune teller.

      "If it passes PhIII ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

      It will be little more than an add-on sold generically... No Multi Billion Blockbuster.... Hype & Greed drive garbage & suckers pile-in.

    • DITO

      Merry XMASS

    • You also have a Merry Christmas, boxcar. I am clear of OGXI, but good luck with your trade!

    • no problem
      you are entitled to your trade to short
      but please give it a break as your frequent posts are annoying everyone
      write a detailed post defending your view
      otherwise you will be on ignore for most people including myself

    • just a contrarian trader to all the BS pumpers

    • so what is your point? you are posting all these posts here because
      1. you are short
      2. you are a sour burned long due to stock price correction
      3. you dont have anything to do
      4. you have to do charity work due to traffic violation

      Please answer so we can understand your beef.

    • The day before yesterday I never heard of OGXI but when I clicked on the Teva site I read the news of their tie-up with OGIX. As a long term investor in Teva I am very well attuned to their modus operandi and if they felt confident enough to put money into a company and agree to such an extraordinarily high royalty then I proceeded to buy OGXI (even without due diligence). No company would agree to such a high royalty without having the utmost confidence of the eventual success of the drug.

      One must know the history of Teva and its management's capabilities to understand that what they touch usually results in
      a positive end. This shrewd mngmt saw something that smelled too good to pass up and if it meant giving OGIX a sweet deal then good luck to both.

    • we are now going to trade on those fundamentals as the pimping of OGXI is over.

    • "I've been a shareholder for many years and despite the market reaction this deal makes me extremely proud and confident in OGXI's future."

      Many YEARS a shareholder?
      Please explain how that is possible as the former Sonus served as a shell entity?

    • Hi there Dr....it was unfortunate to see the precipitious decline on the news of the partnering agreement. I beieve we are seeing a market dislocation. No doubt, there were many investors who had different expectations and when those were not met, instead of peeling back the layers to better understand the potential value drivers, they moved to other "plays".

      It happens and it what makes the "market" unefficient at times as short term, mid term, and longer term investors value things differently...then we end up with these cross currents.

      I think you provided a very good synopsis of the longer term value thesis. Most developmental biotechs have to worry about how they will pay the bills...pay for expensive trials...and embark on new clinical studies. We know that the two Phase III trials would have cost Onco about 80 million if they chose to go it alone. That would have been a lot of dilution. The Phase III NSCLC would likely have cost 45-50 million. That alot of dough when you add it all up.

      The definitive agreement (see new SEC filing) confirms what Onco's leadership stated yesterday in the teleconference. Teva is responsible for all of those costs. And any other costs associated with the clinical developmen plan (CDP). Teva also is responsible for all marketing costs with product launch. The royalty stream is fairly robust as you mentioned and the definitive agreement has specific language pertaining to a prospective future acquisition which economically makes sense for Teva if the Phase III trial(s) are successful.

      Onco spends less than 1 million a quarter on G&A and their cash burn in the past has ranged 3-5 million per quarter. I estimate that Onco now has about 55 million in cash. A very nice position to be in for a small biotech.

      Not many small biotechs have 3 Phase III that are about to be launched over the next 12-15 months. I expect both of the CRPC Phase III trials will start 1H 2010. The NSCLC will start early 2011. I expect we will hear from Onco next year regarding the SPA for the NSCLC trial as those discussions with the FDA are likely occuring or about to occur.

      Also, as you underscored, the OGX-427 compound is also a potential platform unto itelf (like OGX-011). If OGX-472 delivers, then there is yet another potential partership that could be forged for this compound the targets a unique protein that is overexpressed in multiple cancers. Next year we will likely get an update on enrollment and possibly some early data.

      I gladly added more shares with the huge negative reaction yesterday. While not fullfilling everybody's expectation, this "play" has considerable traction now in terms of cost management going forward. I like the fact that Onco will be handling the Phase III trial as they have already done a lot of pre-work.

      Knowing what i do about the clinical safety and efficacy of the compound, i think a number of seasoned investors and institutions will make room for this in their portfolio.

      • 2 Replies to paradigm.shifter
      • I don't think the market is being inefficient in valuing OGXI. Yes they have 3 Ph III trials launching but it's for a single compound, and you can bet if they fail the first line prostate trial but meet on the 2nd line trial that will be viewed as a negative, so really you have 2 important trials going on that won't yield any material results for at least 2 years. The Phase III NSCLC won't initiate til 2011, so you won't see anything from that trial until 2014. So the question is will new investors pour in and take this higher knowing that there won't be any visible value driving events for some time. IMO, this is dead money for a while, it might trade in a range, but you can probably get back in here in 2012 right around where it is today, or possibly lower.

      • Many people didn't understand what they were investing in depth. The market reaction showed just that. I thought there were two reasons why it took so long to get the deal done:

        1. OGXI doesn't own the full rights of the drug.
        2. 011 is adjuvant therapy.

        Only after the deal was announced, many people realized ISIS took a large cut of the money. They should know before. However, those people didn't realize if the deal were to structure the way they wanted, ISIS would have taken even a bigger cut. If the drug succeeds, this is the best deal for OGXI. Of course, if the drug fails, you'd rather take the money and run right now. Since the drug already showed survival benefit, and going to be tested in both first line and second line, the odds is better than others who haven't so far.

        I agree with those who said TEVA is a perfect partner for this particular drug. Due to adjuvant status, big pharma would not be as committed to 011 as TEVA.

        Yesterday I became a much bigger owner of OGXI than before.

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