With Teva out, OncoGenex shrinks its PhIII lung cancer study

Yesterday, Teva ($TEVA) formally tied off its collaboration with Seattle-based OncoGenex ($OGXI) after handing over a $23 million payment as it exited a partnership to develop the biotech's late-stage cancer drug custirsen. Today, OncoGenex took the next step in its survival plan, trimming down the size and length of an ongoing trial as it reorganizes in the face of a major setback. And later this morning the company added that it had struck a deal to sell $2 million in shares to Lincoln Park Capital Fund with a pact to sell up to $16 million more in shares over the next two years.

Now that OncoGenex is responsible for the Phase III non-small cell lung cancer study, including responsibility for the costs, it suddenly sees a much greater need for urgency in wrapping the study. So billing this as a move to more quickly provide "choices" for patients, the company is slashing projected enrollment from 1,100 to 700 and moving up a second futility analysis, which is expected in mid-2015.

 "We believe these rigorous protocol changes reflect the most responsible course of action for these patients, who unfortunately do not have the gift of time," said CMO Cindy Jacobs.

Left unsaid was the fact that the biotech has been scrambling to cut its costs and stretch out its cash reserves to make it through Phase III.

Two months ago OncoGenex also executed a lease termination so it could cut its rent payments and lower overhead. In the 8-K the company filed at the time, two months after Teva said it would bolt, OncoGenex noted that it had paid $2 million to break the lease and would provide another $1.25 million if one of its Phase III studies is successful or the company can raise $20 million.

Teva decided to cut its losses after custirsen flopped in a Phase III prostate cancer study almost exactly a year ago. A combination of custirsen and docetaxel barely edged out docetaxel alone for the rate of overall survival--23.4 months versus 22.2 months--for castration-resistant patients with metastatic disease. And the failure followed a string of big new drug approvals among the leading players in the field.

OncoGenex, which saw its share price slip 3% this morning, claims that it's all about helping patients. The company has a market cap of about $47 million.

"These protocol changes will provide us with a more expedient path to assess custirsen's potential survival benefit," said CEO Scott Cormack in a statement. "Reducing the sample size of the trial will enable us to evaluate the potential of custirsen in an earlier timeframe, hopefully accelerating the path to regulatory review and potential availability. We believe these are important steps in our efforts to give patients with advanced NSCLC more choices when their initial treatments fail."

- here's the release
- here's the 8-K on the lease

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