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OncoGenex Pharmaceuticals, Inc. Message Board

  • mr_ssssamsa mr_ssssamsa Feb 18, 2014 10:04 PM Flag

    Question on price action ahead of P3 results

    Since we're now 3 months or less from SYNERGY results, I was wondering what experiences posters have had with whether the stock price action ahead of a "binary"-type P3 result foreshadowed the outcome.

    The P3 experience I remember most vividly, because it's the one where I had the most invested, involved SNUS, the company which "reverse merged" into OGXI in mid-2008. The Yahoo tab for "historical prices" for OGXI actually lists prices for SNUS prior to mid-2008. SNUS announced the failure of the P3 for its lead product on September 24, 2007. The stock, which had closed at $4.35 the previous session, opened at 68 cents. The steepness of the plunge was due in large part to the fact that SNUS had no pipeline to speak of behind its lead product. (They did have $30mm in cash, which OGXI, which was then a private company that had a pipeline but no cash, needed -- hence the reverse merger.)

    If you look at the historical price chart you find that SNUS closed at $6.13 on June 5. It then drifted down to the low 5s in July, then into the high 3s around August 15 -- about 5 weeks before the data announcement -- before recovering slightly.

    The SNUS P3 trial was open-label, as SYNERGY is, so I've always interpreted the price action as a sign of a leak. I suppose it could have just been people exiting because they were unsure of the outcome and didn't want to be holding, or there could be other explanations. Most analysts were predicting success because the trial seemed to have a low bar and the P2 results, though non-randomized, were promising.

    So I'm curious what others' experiences have been, at least with open label trials . It doesn't look like we'll be meeting the Feuerstein-Ratain Rule standard, which I believe is a market cap of at least $300mm ahead of data. That would be $20 a share. But the rule seems premised in part on the idea that there are leaks, so it would seem to me that a favorable price direction may be more important than the market cap

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    • I do think anyone who observes a selected number of patients can draw much conclusion from it. We are looking at 23 vs 27m median with censors. It is very difficult to gather much information from what's available at few sites.

      I've also seen companies with open label trials to lose 75% after the trial failure. Open label does not necessarily imply leaks. I am not saying there are no leaks but there is not enough evidence that there are leaks. Every time I thought there were leaks in TEVA or OGXI, it turned out I was wrong (e.g., interim). However, now that I do not think there are leaks, I'm sure there are.

    • A confounding factor is the ATM facility which may be used before results are announced. In the event of a runup, the company may be doing some selling against the grain. Not sure if it would have a material effect.

      Sentiment: Hold

    • One more thought: unlike SNUS, OGXI has been trading in a narrow range (11.50-12) since announcing that data was locked. If that continues through announcement of the results (not saying it will), then I would interpret that as meaning either (a) the outcome is unknown, either because there's been no leak or because the result is too close to call, or (b) there's an expectation SYNERGY will fail but sufficient expectation of positive results in Borealis-1, for which data is expected a few months later, or in other P2 trials of 427 or the other P3 trials of custirsen (AFFINITY and ENSPIRIT) to justify the current market cap of around $170mm. That cap seems too low to reflect an expectation of SYNERGY success.

      Borealis-1 is double-blinded so I wouldn't think there could be any leak there but the previously-reported results for 427 could justify some optimism. Scott Cormack said at Leerink last week that Borealis-1 would report before either the PACIFIC or SPRUCE trials of 427. SPRUCE is double-blinded but PACIFIC is open label so there could be a leak there but it's still recruiting so it seems unlikely.

      If the price trend continues and it in fact reflects a belief that SYNERGY will fail but the pipeline justifies the current market cap then if SYNERGY does fail there may not be a big selloff. Not that I'm predicting that.

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