Teva hands over $27M, cancer drug rights to OncoGenex in Phase III divorce

Eight months after OncoGenex Pharmaceuticals and Teva ($TEVA) acknowledged that their experimental cancer drug custirsen had flopped in a Phase III prostate cancer study, the big Israeli pharma company has executed a strategic retreat from their partnership. Teva is handing over $27 million to OncoGenex to complete the divorce and is walking away from a deal that included $60 million in upfront costs back in 2009.

Custirsen is also in Phase III for non-small cell lung cancer and another late-stage study for prostate cancer. With the breakup fee, Bothell, WA-based OncoGenex ($OGXI)--which has a market cap of only $46 million after its stock went into meltdown mode last spring--says it has enough cash to see through the other prostate cancer study as well as make it to the second interim analysis for its non-small cell lung cancer study. The biotech will also take over responsibility for manufacturing.

The big idea at OncoGenex is that the protein clusterin plays a significant role in the survival of cancer cells and resistance to treatment. But Teva evidently no longer sees much of a future in it.

OncoGenex CEO Scott Cormack also is looking to pare back enrollment in one of the Phase IIIs in an effort to blaze a shortcut to regulators.

"Teva's strategic focus has shifted away from oncology research and development. However, OncoGenex remains committed to the continued investigation of custirsen, particularly in patients who have advancing disease despite previous treatments," said Cormack. "This agreement provides OncoGenex with greater control of custirsen's development, including the modification of the ENSPIRIT statistical analysis plan to involve a more rigorous second interim futility analysis to be completed in the second quarter of 2015 that, if passed, would enable the trial to continue with a smaller enrollment requirement, increased confidence in success and shorter time to regulatory submission."

- here's the release