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OncoGenex Pharmaceuticals, Inc. Message Board

  • dr.kuvasz dr.kuvasz Aug 7, 2009 3:59 PM Flag

    Versant Partners

    I understand they have valued OGXI at $45 USD pps. I haven't seen report yet.

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    • looks like a nice pullback. will be looking at putting some back in on the long side.

      what do you think of zd4054?

    • The valuation of OGXI is tied to one unique fact: 6 million shares.

      Stock splits, as cash points out, is inevitable along the way, if OGXI hits certain targets that have been discussed: partnership announcement on 011, 011 hits indicators, 427 development, and bringing on the other drugs in the pipeline.

      Splits will make it attractive for others to invest at more affordable prices.

      It is really up to each shareholder to do their own due diligence; however, comparison of failed drugs at phase III to OGXI products is not helpful.

      For example, there is some discussion today about Novacea-Dn101 which had improved survival data in Phase II but failed in Phase III.

      The main reason Phase III failed was because the compared DN101 was with once weekly Taxotere to every 3 week taxotere (which is the superior regimen in Tax327 trial).

      Hence, DN101 failed in Phase III because they went into Phase III with the wrong combination regimen of taxotere.

    • 6 million shares and this time next year you will need to add multiple cancers to your caclulations for OGX-011.
      AND, a second drug, 0GX-427, that may have some strong phase 2 numbers.

      I would like to think about how many splits are in the future of these 6 million shares. In the real world OncoGenex is more likely going to see one huge buyout price.

    • Agreed. Market has been on fire and biotech way much more so. Risky assets have been in demand. Now that stocks are getting relatively valued, it will be interesting if risky assets continue to attract money flow, or stocks pull back, or (?). I would like to get in a bit cheaper, but if I miss it, there are tons of other great names to play with similar opportunities.

    • Seems to me you've made a case for not holding your entire position until the P3 results are announced (or maybe, if you're concerned that the trial could be stopped due to unexpected safety problems, until the P3 is underway). I agree that you never know what can happen in a P3. But why sell before they announce a partnership? They've said they're talking to "multiple" prospective partners and expect a deal before the end of the year. That could be December 31 or next week. I have no reason to doubt them because (a) no one in management has sold any shares, and (b) they raised only short-term financing of $9mm recently when they could have raised a lot more. Also, they haven't ruled out the possibility of a buyout.

      So it seems to me the main risk between now and the announcement of a deal is that the market could nosedive again. I don't dismiss that possibility and have sold 20% of my shares solely for that reason. When they do the deal I'll probably sell some more, though certainly not my entire position. Of course, if you're very risk-averse, you might want to do that, as you already have.

      BTW, I think the fact that they have evidence of single-agent activity in OGX-427 in an indirect way boosts the prospects for OGX-011. Granted, they haven't shown single-agent activity for OGX-011 but they said in the ASCO presentation that it also targets a heat-shock protein and who knows, maybe they just didn't look for single-agent activity in 0GX-011. If you have single-agent activity, then you'd expect even more activity in combination with chemo, and that, along with all the other evidence Paradigm cited, reduces the odds that the P2 results were just a fluke.

    • The Versant Partners' valuation referred to in this thread (45 US$), is consistent with those issued by Wedbush and R and R (40 USD) at around the same time.

      The stated assumption of the Wedbush and R and R valuations is OGXI achieving its goal of partnership for O11 in 2009. Phase II data certainly comprises part of the valuation.

      If OGXI achieves its stated goal of a partnership announcement, valuation will be affected taking into account:

      1. cash received by OGXI, whether upfront or as milestone payments. With only six million s/o, an infusion of cash has a big impact.

      2. partnership allows OGXI to confirm that its Phase II data stands up and to earn future revenues from 011. Presently OGXI does not have the funding to do that, not without issuing more shares and diluting the share price.

      3. OGXI has the ability to use any cash it receives from a partnership to develop its other promising drugs-like 427-without issuing more shares. This potentially increases share value. I'm not sure anyone really talked about 011 much this week after the announcement of direct infusion of 427 into bladder as part of a new test.

      As Wedbush says, there are signs that big pharma are doing their due diligence around the OGXI pipeline. They will be using their experts to take a hard look at 011.

      If OGXI achieves its stated goal of a partnership announcement, that should weigh heavily in favour of investing in OGXI at these valuations.

      It also may say something about what big pharma thinks about O11 and the data of Phase II.

      Hard to bull#%G* them.

    • take a look at novacea's ASCENT study. Secondary endpoint - 250 patients, p=0.035, hazard ratio 0.67, overall survival benefit 23.4 months vs 16.4 months. it wound up failing in phase 3 when there were more unexplained deaths in the treatment arm. think about it. may not necessarily be the case, but it shouldnt be ignored. there are other studies as well with similar results.

    • I hear that. I rode it from 14 to 29. I'm out, but certainly not going to short it. If I get another look in the lower 20's, I'll consider it. I was very bullish on it, but a little less at this valuation (unless we get more data). There are plenty of phase 2's that looked perfect yet were complete disasters when tried again. By all means I hope that this isn't the case here but it still may be just chance that statistical signficance was almost met (or met in other ways).

    • Changing the SPA for the PHase III to apply to 1st line CRPC patients (as opposed to 2nd line) changes the valuation math.

      Also, we should remember the Phase III trial for pain palliation with 2nd line CRPC patients.

      This is my back of the envelope. I think its reasonably conservative and i have used revenue benchmarks from various sources. Nothing fancy here and i think most of you are familiar with this form of valuing a growing biotech company.

      I significantly discounted the peak sales (by 55-60%) assuming that OGX-011 would be less costly than taxotere when combined. And as a combination drug, OGX-011 would likely be priced less. Sales are U.S only.

      1st line CRPC: peak sales of $250 - 325 million

      2nd line CRPC: $130 - 175 million

      Projected Revenue Range: $380 - 500 million

      As Onco is just entering Phase III, i chose to apply a 2x (revenues) weighting to arrive at the valuation. This is what Cougar was valued at with the J&J buyout. DNDN share price is currently reflecting a value of 2.75x (projected revenues of 1 billion). Both of these companies have lead drugs targeting 1st line CRPC. I assume 6 million shares fully diluted.

      Projected share Price: $126 - $166

      One can play with the revenues (up or down) and the weighting (up or down)....but i think the data shows there is considerable upside here with ONCO. Rodman and Renshaw has argued for some time (even before J&J took out Courgar), that Onco's market cap should be much closer to Cougar. At the time of that analyst update (back in May), Onco had a cap of arouond 75 million and Cougar was at 900 million.

      Onco is moving up, but it would appear to this observer that ONCO's stingy release of shares (i.e. only 6 million fully diluted) has created an investor value bonanza if thing keep on track. And bear in mind, this valuation i came up with does not take into account OgX-011 strong PHase II results in NSCLC to date or the rest of thier pipeline.

      It interesting how the numbers come out when one uses 6 million shares.

      • 1 Reply to paradigm.shifter
      • Paradigm Shifter:

        Thank you once again for your analysis and close attention to relevant details. I owe you several bottles of good Okanagan Valley wine.

        I think you hit a bulls eye...6 million shares knocks the breath out of anyone looking at OGXI.

        However, the ability to predict growth in the value of OGXI escapes any degree of certainty (as you indicate in your conservative assumptions on valuation).

        For my part, lets take just one of those variables you mentioned - the products streaming forward in the pipeline. There are several of them, as you know.

        Gleave is a world leader in cancer research and drug development. One area he in which he cannot be touched is in the clinical treatment of dying patients.

        As you say, why do we presume 011 is the only arrow in OGXI's quiver? There are several more drugs coming down the pipeline which will be in the same major leagues that O11 is in...Gleave simply does not play in the minor leagues so as to jeopardize patients' interests.

        Only time will tell about the valuation of OGXI. Sooner or later, there must be an emphasis on the distinction between the value of 011, and OGXI as a going business concern with a superb management team and a bundle of promising drugs.

        That is why I like Isisbeliever's thesis on investment in OGXI: wait for two more years to see it gap up to its value before phase III results are disclosed on 011.

        This strategy allows for more time for further value to be gained for the other drugs, as well as the cross application of 011 to other tumors.

        Maybe Isisbeliever is a Rolling Stones fan...didn't they sing "time, time, is on your side."

        Mick Jagger may be telling us shareholders something: the next two years is when real value in OGXI will be realized with minimal risks.

        Mick is a rich old guy. I'm going to listen to his songs for further guidance.

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