OncoGenex scores $430 million deal, but shares slide

Teva Pharmaceuticals is paying OncoGenex $60 million in initial payments--including a $10 million equity stake--for partnership rights to a new drug aimed at enhancing the effects of chemo.  But news of the $430 million deal, which includes Teva's commitment to buy a chunk of the developer's stock at a premium, triggered a sell-off in OncoGenex, which saw its shares slide 23 percent.

OncoGenex stands to earn up to $370 million in milestones on the successful development of OGX-011. And in a statement the developer says it could also earn royalties that reach as high as the mid-twenties. OncoGenex retains co-promotion rights in the U.S. and Canada. Phase III trials are scheduled to begin in 2010 and early 2011.

"The agreement provides us with capital resources for the development of OGX-011 through completion of the Phase III clinical trials and into product commercialization," OncoGenex Chief Executive Scott Cormack says in a statement.

So why the slide in share price? TheStreet's Adam Feuerstein says the 'spanking' was earned. OncoGenex will have to give Isis a big cut of the upfront and royalties, leaving investors hungering for more. And Teva got the discount deal, he adds, after OncoGenex failed to line up a really impressive player in the branded drug business.

- check out the OncoGenex release
- here's the report from Dow Jones
- check out the story from TheStreet