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OncoGenex Grabs $60M Upfront From Teva for Rights to Cancer Drug, Shares Drop Anyway

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having to raise equity from Wall Street, while also building up its pipeline of other drug candidates besides OGX-011.

Cormack also noted that he picked this deal because it didn’t pigeonhole this product as solely for prostate cancer. Because of the way it is designed to work by blocking clusterin, researchers hope it will be useful against other tumor types as well. One other main reason to pick Teva was its desire to become a bigger player in brand-name cancer drugs, Cormack says. That means it’s likely that OGX-011 won’t get lost in the shuffle of a vast portfolio of internal drug candidates, Cormack says.

But first things first, OncoGenex only has about 25 employees, so it needed the money and manpower of a big partner to capitalize on the drug’s potential in its lead application—prostate cancer. The companies plan to start a pair of Phase III clinical trials in 2010 that are expected to enroll 1,100 patients combined. Both trials will enroll men whose tumors have spread after the usual chemical castration therapies stopped working. One difference is that one trial of 800 men will be getting their first round of chemotherapy, while the other 300 patients will be getting their second round.

A third study will test OGX-011’s potential in a different disease, non-small cell lung cancer, beginning in early 2011.

If OncoGenex passes the next round of trials, it could face off against some stiff competition. Seattle-based Dendreon (NASDAQ: DNDN) is vying for FDA approval of the first treatment of its kind to stimulate the immune system against cancer. Johnson & Johnson also acquired Los Angeles-based Cougar Biotechnology for $894 million this year for an experimental prostate cancer drug in the final stage of development, and San Francisco-based Medivation secured a partnership with Japan-based Astellas Pharma that could be worth as much as $655 million over time.

The standard of care at the moment is Sanofi-Aventis’ docetaxel (Taxotere), a chemotherapy that has been shown to increase survival time by a median of 2.4 months, with significant side effects. The OncoGenex clinical trials tested OGX-011 in combination with docetaxel.

[Updated: 9:52 am Eastern, 12/21/09] It turns out that OncoGenex owes a fair chunk of its new partnership dollars to Isis Pharmaceuticals, the Carlsbad, CA-based company that developed the second-generation form of antisense therapies that gave rise to OGX-011. Isis said today it will receive $10 million of the $60 million in upfront payments that are going to OncoGenex. Isis will also get 30 percent of the $370 million in development milestones that OncoGenex negotiated with Teva, and a 5.5 to 7 percent royalty on all sales of OGX-011 if it becomes a marketed product.

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