Ventures West Cashes Out Stake in OncoGenex, Developer of Prostate Cancer Drug

6/10/09Follow @xconomy

Who says you can’t make money investing in biotech? Vancouver, BC-based Ventures West, one of the largest venture firms in Canada, has cashed out on its booming investment in Bothell, WA-based OncoGenex Pharmaceuticals (NASDAQ: OGXI).

Ventures West disclosed earlier this week in a regulatory filing that it has sold all of its shares in OncoGenex—which normally would pass with little notice except for one important fact. OncoGenex shares have generated a huge returns since Dec. 2, as it has boomed from $2.25 a share to $25.91 at yesterday’s close. The company has been riding a wave of enthusiasm for its experimental prostate cancer drug, OGX-011, which has shown an ability to help men live longer in a small clinical trial.

Ventures West didn’t disclose when it sold its shares, or at what price, so it’s impossible to say how much the firm pocketed from the public record. Ventures West managing director Ken Galbraith didn’t respond to a request for comment.

But here’s what I was able to piece together from the public record. Ventures West held 926,819 shares in OncoGenex, a 16.8 percent ownership stake, on Aug. 21, when it disclosed its holdings in a regulatory filing after the company merged with Sonus Pharmaceuticals. The company’s shares hovered in the $2 range for much of October and November. Then it burst on the scene in Dec. 3 with a preliminary analysis that said its prostate cancer drug helped men live longer in a clinical trial of 82 patients with terminal illness. That drove the stock up from $2.25 to briefly more than $8 in the next week.

Ventures West took advantage of that momentum to take some profits, selling 450,000 shares—about half of its stake—at $5.95 apiece on Dec. 15, according to this regulatory filing. That generated about $2.7 million in revenue for the firm.

Things have continued to get better for OncoGenex since then. The company presented a detailed, final analysis of the clinical trial last month at the American Society of Clinical Oncology conference. The more in-depth analysis confirmed that the OncoGenex drug significantly lowered the risk of death in a clinical trial. The stock has continued on a bull run since the scientific meeting, trading at over $20 now for a full week. If Ventures West was able to cash out 475,000 shares at $20 apiece in the last week, that would be about $10 million.

OncoGenex was founded in 2000, and raised more than $35 million in three venture rounds before it first attempted to go public on the NASDAQ in December 2006, according to this story from the Vancouver Sun. (It never went public via the traditional offering to new investors, but did so by merging with another company, Sonus Pharmaceuticals.)

Ventures West has been invested in OncoGenex since at least October 2003, when it led a $11.5 million financing, according to this press release. Ventures West also participated in a $12.8 million round in August 2005. It was joined in the last venture financing by HIG Ventures, Business Development Bank of Canada, the Working Opportunity Fund managed by GrowthWorks Capital, William Harris Investors, and BC Advantage Funds.

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