John McCamant, Medical Technology Stock Letter (12/21/12) "OncoGenex Pharmaceuticals Inc. has done a good job building a pipeline behind its lead drug-development candidate, custersin, which is in multiple phase 3 trials. While 427 was barely on the radar screen when custersin entered phase 3 development, the drug development candidate is poised to deliver multiple phase 2 results in 2013; we continue to believe that the company is undervalued and that 427 is basically a free 'wild card' for OncoGenex's shareholders."
Greg Wade, Wedbush (12/19/12) "OncoGenex Pharmaceuticals Inc. has begun the phase 2 (PACIFC) study of OGX-427 and Zytiga in prostate cancer patients. . .we view the PACIFC study as a logical continuation of the positive data seen for OGX-427+prednisone compared to prednisone alone that was reported in September. Recall that study showed patients treated with OGX-427+prednisone had a 71% disease control rate, compared to 48% of prednisone-treated patients, with 56% of OGX-427 patients having a 50% or greater prostrate-specific antigen decline, compared to 27% of prednisone-treated patients. . .we are maintaining our Outperform rating."
Katherine Xu, William Blair (12/19/12) "Top‐line data from OncoGenex Pharmaceutical Inc.'s SYNERGY (custirsen+Taxotere) is expected during Q4/13. . .we maintain Outperform rating and $21 price target. Our current valuation is based solely on the company's lead candidate, custirsen. . .in our probability‐adjusted NPV model, we assume peak worldwide sales of custirsen in metastatic castration-resistant prostate cancer and non‐small cell lung cancer of $580M and $250M respectively, with 60% probability of success for custirsen in both indications. . .revenues from OncoGenex's second clinical candidate, OGX‐427, would provide upside to our current valuation."
If current projected average analyst price targets are currently $24 and 427 is a free wild card that would privide upside. So if all 427 P2 trials that read out in 2013 are positive one would expect analyst PT's to rise into the $30's. I'm already there.
There was an article on Marketwatch today by Mark Hulbert of Hulbert Financial Digest entitled "Small is beautiful, tiny is even better" which argues that the "January effect" works mostly in favor of small-cap companies. He then lists OGXI among 9 companies that he says have a market cap of less than $100 million and are recommended by at least two monitored advisors. Of course, OGXI's market cap, while pitiful enough, is more than $100 million so that makes you wonder about Hulbert right there, but hopefully his point is well taken.
Other factors could be that the negative pressures of year-end tax selling and the fiscal cliff are abating.
Next year obviously is make or break for 011 as SYNERGY is expected to report around year-end. I listened to most of Teva's "strategic presentation" a few weeks ago and they downplayed oncology and said hardly anything about 011. On the other hand, they announced they were discontinuing several partnerships for products that are also in clinical trials so the fact that they're not discontinuing the 011 partnership is a good sign I suppose. Or at least a sign that they probably don't have any negative interim results at this time.
Hopefully 427 will continue to move along nicely in 2013. They've started the trial with Zytiga and according to one of the slide presentations on the OGXI website they hope to report interim data in early 2014. And we may get updates in 2013 on enrollment in the 427 randomized P2 bladder trial that's scheduled to report data in 2014.
Hi Box, I just spent a nice week in Boca Grande Florida. I have no idea what OGXI is going to do in 2013. I thought it would grow in value as we got closer to release of data date. Maybe if the market remains strong, we will see that. But it makes it tough to adopt a strategy for investment for longs like me. I've got a lot in the game. I think I need more vacations on the Gulf to allow me to reflect.