Tang was (might still be) OGXI's largest institutional shareholder. As of 9/30/2013, the fund held 933,100 shares of OGXI. According to an article dated 1/17/2014, Tang trimmed its position by about 20% (down to 747,614 shares.)
There obviously can be any number of explanations ranging from profit-taking to disappointment over the news released in Q4, or anything in between. Even though I do it, IMO, "whale watching" is an exercise in futility. Blackrock, SAC Capital, and Soros all had large bets on DNDN in its glory days, and we all know how that worked out. The only reason I find Tang's activity noteworthy is because the fund had been OGXI's largest and most loyal shareholder.
Reference: google "Tang Capital Management Is Getting Out of Oncogenex."
Disclosure: Long OGXI (427 specifically) and not bashing. That said, I view the news that the P3 Synergy target events were reached (early?) as an unfavorable development, and I believe yesterday's selloff reflected that sentiment. However, as long as no toxicity issues come to light (which would put the kibosh on OGXI's entire ISIS-based pipeline),I won't be phased by otherwise disappointing Synergy results. OGXI can survive without 011. With or without 011, OGXI's fate ultimately rests with 427, IMO.
"If I had to speculate on announcement timing, I'd say fast is bad and slower is good. Almost would make me want to sell March calls and buy March puts."
"Why? What would that do?"
Depending on the strike prices, I assume it would make him $$$ if the bearish bet were to pan out that SYNERGY results released by 3/22/2014 are more likely to be unfavorable than not ("I'd say fast is bad and slower is good.") Even if bad 011 news were coming down the pike sooner rather than later, a well-thought out bearish bet on 011 could end badly if good 427 news were to be "leaked" first.
I've seen the term P-value referenced here, and never fully grasped its importance.. AF just posted on Twitter a link to a Pubmed abstract of the above-referenced article. How important will the P-value calculation be when the SYNERGY results are evaluated?
"The P value is a measure of statistical evidence that appears in virtually all medical research papers. Its interpretation is made extraordinarily difficult because it is not part of any formal system of statistical inference. As a result, the P value's inferential meaning is widely and often wildly misconstrued, a fact that has been pointed out in innumerable papers and books appearing since at least the 1940s. This commentary reviews a dozen of these common misinterpretations and explains why each is wrong. It also reviews the possible consequences of these improper understandings or representations of its meaning. Finally, it contrasts the P value with its Bayesian counterpart, the Bayes' factor, which has virtually all of the desirable properties of an evidential measure that the P value lacks, most notably interpretability. The most serious consequence of this array of P-value misconceptions is the false belief that the probability of a conclusion being in error can be calculated from the data in a single experiment without reference to external evidence or the plausibility of the underlying mechanism."
Reference: google "A dirty dozen: twelve p-value misconceptions" or use the link at Adam Feuerstein's Twitter feed.
OGXI's second largest institutional shareholder (behind Tang) and a 5% holder on 9/30/2013 (763,332 shares) liquidated its stake during Q4. Bear case is Kolchinsky doesn't have a good feeling about SYNERGY, Less pessimistic explanations: tax loss selling/profit taking; Kolchinsky is timing the market and intends to reestablish a position later in 2014; dumb move?.
RA's activity must have been the engine driving the stock price to $7 as FMR appears to be done selling (added about 10K shares in Q4.)
Royalty payments to ISIS are OGXI's liability because ISIS licensed the antisense technology to OGXI. My understanding is that Isis gets royalties of 5% on custirsen sales and 30% of non-royalty payments (such as milestone payments to OGXI from TEVA.)
OGXI retained the right to co-promote custirsen in North America. In a 2011 report, William Blair analyst, Katherine Xu, assumed a 50-50 profit-sharing arrangement between OGXI and TEVA in the US, and 15% net royalties to OGXI for sales outside the US. .
The William Blair report is old. Others might be able to post a more updated valuation. Below is Katherine Xu's rationale at the time.
"With $570 million worldwide sales for custirsen in prostate cancer, 60% probability of success,
50-50 proﬁt sharing with partner Teva in the United States, and blended 15% net royalty for
sales outside the United States, we derive our $21 price target."
My sentiment, as well. An 011 success, however, would validate OGXI's pipeline (427) sooner rather than later.
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.
In the runup to MDVN's good news, a leak seemed to have prompted a bear raid on OGXI's shares while the traders conveniently overlooked MDVN's own stock. Analysts subsequently explained the decline in OGXI's PPS as a reaction to the impact that Xtandi will have on the prostate cancer landscape. The "reaction" in OGXI's stock price, however, ominously PRECEDED the publication of the good Xtandi news. If history were to repeat itself, I'd expect traders hoping to profit from inside info to again pick a less obvious target (TEVA) to avoid arousing too much suspicion. IMO
Report is from 2011. Xu's price target and computations may have changed in the interim. The relevant assumption (for me) was that Xu modeled OGXI exercising its right to co-promote 011 in North America (well, USA - she doesn't mention Canada) in the event of approval. Since no analyst I know of is yet assigning any value to 427 (OGXI's biggest moneymaker if approved), I don't find any of their math bankable. JMO
Excerpt from David Sobek article today on ONTX fail. Different disease and drug, but similar risk (as everyone knows.) A propos of biotech investing in general.
"I have been writing about Onconova Therapeutics for quite some time and owned the stock. While acknowledging the outcome of the rigosertib high-risk MDS study would be a close call, I believed it would squeak by as a success. In biotech investing, you analyze the data and decide what you think is most likely to occur. Sometimes (a lot of the times) your best guess ends up being wrong. Unfortunately, that's what happened Wednesday night with Onconova
"Why did the rigosertib high-risk MDS trial fail?
"In the first article I wrote on Onconova, I discussed the assumption used to predict survival for patients in the best supportive care arm. Cancer drug studies often fail not because the experimental therapy under-performs, but because the control arm out-performs expectations. For rigosertib to be successful, Onconova needed to make accurate predictions about how long patients with high-risk MDS would live if treated with best supportive care alone. For this study, the company assumed best supportive care patients (the control arm) would have a median overall survival of approximately 17 weeks. In reality, as we learned Wednesday night, these control arm patients reported a median overall survival of about 24 weeks. They lived longer than Onconova predicted."
"As reported by Onconova Wednesday, high-risk MDS patients treated with rigosertib plus best supportive care showed a median overall survival of 8.2 months compared to 5.8 months in the best supportive care alone arm. Overall, rigosertib added to best supportive care reduced the risk of death by only 14% compared to best supportive care alone. This survival benefit favoring rigosertib was not large enough to be statistically significant.
"Interestingly (at least to me), rigosertib actually outperformed survival expectations by about 3 weeks. The study failed because the control arm patients lived longer than expected, narrowing the difference in survival."
The entire article is posted at The Street web site. The circumstances with ONTX are not identical to those of OGXI.
I wish it were related to 011, but the TEVA move is being attributed to M&A speculation. Google the Bloomberg article, "Teva Advances Amid Takeover Prospects." Below are some excerpts:
"Teva Pharmaceutical Industries Ltd. (TEVA), the world’s largest maker of generic drugs, posted the biggest weekly gain since 2008 as a surge in health-care industry deals spurred speculation the company may be acquired "
"Actavis Plc agreed last week to buy Forest Laboratories Inc. for about $25 billion, raising the tally of pharmaceutical and biotechnology deals in the past 12 months to about $110 billion, the most since 2009. The buyout is boosting prospects that Teva could be acquired next, Maxim Group LLC said. Teva, the largest stock holding in George Soros’s fund, appointed a new chief executive officer, pledged to overhaul its board and cut costs last month as cheaper versions of its multiple sclerosis drug threaten to cut into its market share"
"'What you’re seeing is the company being revalued on the fact that there’s a new CEO, the board will become smaller and more strategically focused, and they will deliver cost savings,' said Jason Kolbert, a biotechnology analyst at Maxim in New York, said Feb. 21. 'That combined with the M&A activity is causing a revaluation in Teva. Speculation is mounting that other drug companies will follow Actavis because they need to make acquisitions to grow and because Teva’s valuation is attractive,' Kolbert said.."
“'You have four large players and Teva is one of them. The thinking is that that could shrink down to three players at some point,'” Kevin Kedra, a health-care analyst at Rye, New York-based Gabelli & Co., said in a Feb. 21 telephone interview. “Whether it’s a buyer or a seller, consolidation is usually pretty good for a stock.”
I expect management to draw on the existing ATM facility prior to the release of 011 results as a hedge against severe dilution in the event of bad news. When the ATM was first announced, I was disappointed, but it's now apparent that management was just being prudent by preparing for a worst- case 011 scenario.
I share your negative short-term outlook if 011 fails, but probably will be adding to my position if bad news comes down the pike.
I believe MDVN's market cap was about $375M 4 months prior to their P3 announcement. The Feuerstein-Ratain Rule (retrospectively) created that cutoff point since stock prices have a way of running up irrationally into results. If MDVN's market cap was about $600M immediately before the MDV3100 announcement, then the market cap rose 60% from the F-R cutoff point to the data release date. That might suggest that OGXI still has room to run, and that traders might simply be delaying allocating $ to OGXI since an announcement is still months away, On the other hand, it might also be that what might have been a glorious run-up in price has been truncated due to renewed P3 doubts (more likely, I suppose.) I've wondered why, based on some of the messages posted here, we're not hearing any analysts changing their outlooks. That could be a good sign. Even Adam Feuerstein - perennial skeptic and basher of all things dubious - is staying on the sidelines on this one: "The F-R Rule will fail eventually. Maybe $OGXI will be the stock to do it." (tweeted by Feuerstein on 2/21/2014.)
IMO, the market seemed to be pricing in a 011 failure when the PPS bottomed earlier at around $7, so I'd expect the PPS to return to around that level - less any adjustment for dilution in connection with the ATM financing (assuming it's drawn upon.) Since the market often overshoots at first, I'm preparing myself for a drop the $3s and a recovery to about $6 when investors get over the shock of 011 and refocus on 427's upcoming results.
Worst case scenario (for me, at least) would be if any secondary (liver) cancers are noted in the 011 treatment arm. If any of the black clouds hanging over ISIS's Kynamro are replicated in SYNERGY, it would be a pox on OGXI's entire pipeline, and I'd expect the bottom to drop out on OGXI;s PPS. That scenario or bad 427 news are the only circumstances that I foresee myself bailing on OGXI.
I don't believe 011 is effective, either (but I do like 427), and I agree that antisense still needs to be proven (although the price action of ISIS seems to reflect a growing acceptance.) But what does DNDN have to do with antisense? Provenge is a therapeutic vaccine and its P3 trial was successful. DNDN is going to go bankrupt due to its business model (Provenge is too expensive to manufacture) - not because of anything it has in common with OGXI.
AF doesn't seem willing to make a call on SYNERGY, so there's no betting with or against AF on 011 (unless being undecided counts as a bet): " The F-R Rule will fail eventually. Maybe $OGXI will be the stock to do it." (Tweeted by AF on 2/21/2014.)
"Adam Feuerstein, by his own statement, excludes this situation from the F-R Rule."
I think you may be alluding to what AF wrote in his Biotech Mailbag column on 2/21/2014: "The F-R Rule applies to the original holder of the drug and not the partner, if one exists. So, in this case, we look at Oncogenex's market cap, not Teva's. With that said, having a partner is a potentially positive mitigating factor because it implies someone conducted due diligence on the drug and liked what they saw enough to shell out money for a license."
While OGXI may be "shelling out money for a license" (to ISIS), AF states that he believes it is OGXI's market cap that is relevant to the F-R Rule. Perhaps, if SYNERGY succeeds, he'll backtrack and disqualify OGXI based on its licensing agreement with ISIS, but that doesn't seem to be his opinion at this time.
My opinion is that the apparent conflict in AF's column (his use of the term "license" and his assertion that OGX's market cap counts) was inadvertent (i.e., the issue is one of semantics.) AF should have tightened up his language and stuck with the term "partnership" as it appears he inadvertently adding a new criterion to the Rule. But that's just my take. You might try tweeting your question to him. Please post his reply if he responds.