OncoGenex Bolsters Pipeline Work via $50M Public Offering
By Jennifer Boggs Assistant Managing Editor
OncoGenex Pharmaceuticals Inc. took advantage of a recent stock bump to boost its cash position via a $50 million public offering.
The Bothell, Wash.-based firm priced about 3.2 million units – each comprising one share and half a warrant – at $15.75, marking a 16 percent discount to the stock's closing price Monday and predictably sending the company's shares, which had gained on industry buzz late last week, down 12.8 percent.
The stock (NASDAQ:OGXI) closed Tuesday at $16.36, down $2.39.
Net proceeds are expected to total about $46.7 million and will be added to the firm's balance sheet, already helped by last year's partnership with Teva Pharmaceuticals Industries Ltd. for prostate cancer drug custirsen. During its August earnings call, management told investors existing cash – about $47 million as of June 30 – should carry OncoGenex into mid-2012.
The latest infusion is expected to help support further work on custirsen, which started the second of two planned Phase III trials in late September.
That study, expected to enroll about 800 men with metastatic castrate-resistant prostate cancer (CRPC) and test the clusterin-targeted antisense drug in combination with a docetaxel/prednisone regimen vs. docetaxel/prednisone alone, will evaluate overall survival as the primary endpoint. OncoGenex is hoping the fast-tracked drug will confirm data seen in an earlier Phase II trial, which showed an overall survival benefit of 6.9 months over controls, wowing analysts at the 2009 American Society of Clinical Oncology meeting. (See BioWorld Today, June 2, 2009.)
Back in June, OncoGenex and Jerusalem-based Teva kicked off the first Phase III study, which is designed to evaluate durable pain palliation as the primary endpoint. About 300 CRPC patients who responded to first-line docetaxel, but subsequently progressed and are experiencing cancer-related pain despite opioid usage will be enrolled. (See BioWorld Today, June 2, 2010.)
Survival will be tracked as an additional endpoint in that trial, which is being conducted under a special protocol assessment with the FDA.
Teva pledged to conduct both the prostate cancer Phase III trials under the companies' licensing agreement, as well as a third Phase III trial testing custirsen in lung cancer. The pharma firm will cover all development and sales costs, while OncoGenex banked $20 million up front, a $10 million equity investment and could receive up to $370 million in milestones plus tiered royalties in the largely back-end-loaded deal. (See BioWorld Today, Dec. 22, 2009.)
Nearly all of investors' focus on OncoGenex has been in prostate cancer program, due to the promising midstage data and the overall excitement in the prostate cancer space following this year's approval of Dendreon Corp.'s cancer vaccine Provenge (sipuleucel-T) and strong Phase III data for abiraterone, a hormone-blocker from Johnson & Johnson. And analysts believe OncoGenex's drug could be positioned as one of the few intended for use in combination with chemotherapy, provided the Phase III trials are able to replicate earlier data.
But OncoGenex's pipeline doesn't stop at custirsen. The firm is planning to use funds from the public offering to advance work on OGX-427, a heat-shock protein 27 inhibitor in development for prostate and bladder cancers.
Last month, a Phase II investigator-sponsored trial began to test OGX-427 in men with metastatic prostate cancer.
A Phase I trial of the drug in bladder cancer also is under way.
OncoGenex has said it is assessing other opportunities to expand the development of OGX-427 and is considering partnering discussions for the program.
Additional proceeds from the offering, set to close Oct. 22, will go toward general corporate purposes.
Still doesn't make any sense to do it now. $47 million in cash as of June 30th, which mgmt says will last until mid-2012. With Teva picking up all the costs on 011, the Phase 1 & 2 trials on 427 can't be that expensive. Don't like the last sentence in her analysis saying the funds were for "general corporate purposes" By mid 2012 Teva would be coming in with milestone payments.