OncoGenex pops but not on the earnings surprise

05/03/2013 6:30 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

I know it looks like OncoGenex Pharmaceuticals (OGXI) has popped today—the shares were up almost 7% as of 1:45 p.m. New York time—on the company’s first quarter earnings surprise. The company reported a loss of 46 cents for the quarter instead of the loss of 72 cents a share expected by Wall Street analysts.

But I don’t think the earnings news was especially important. OncoGenex is a development stage biotech—it’s supposed to lose money every quarter at this point and the “surprise” is an accounting issue involving a gain on warrants this quarter versus a loss of warrants in the first quarter of 2012. (It is important, however, that the company said current cash should be sufficient to fund operations into 2015.)

The big positive news was actually the update on the status of the company’s clinical trials that the company released along with its financial report.

The news on trials included:

  • The completion of registration for a Phase 3 trial to evaluate the survival benefit of the company’s custirsen in combination with docetaxel chemotherapy in the treatment of metastatic prostate cancer. Results are projected for announcement in the first half of 2014.

  • Continuing enrollment in additional Phase 3 custirsen trials to evaluate the survival benefit of custirsen in combination with Jevtana (cabazitaxel) in metastatic prostate cancer and in combination with docetaxel in the treatment of advanced or metastatic non-small cell lung cancer.

  • The initiation of a Phase 2 trial of OGX-427 in combination with Abraxane and gemcitabine in metastatic pancreatic cancer. Other trials of OGX-427 are evaluating the compound for use in advanced bladder, lung, and prostate cancers. Positive OGX-427 results would be especially important to OncoGenex since the company has not yet sold partner rights to OGX-427.


I continue to recommend this stock (it’s a member of my Jubak’s Picks portfolio http://jubakpicks.com/  ) for patient—very patient investors—especially in its recent range of $10 to $13 a share. The driver here will be the results of the Phase 2 and Phase 3 trials. I wouldn’t expect significant positive news on that front until later in 2013. As of May 3, I’m keeping my target price at $22 a share.

Full disclosure: I don’t own shares of any of the companies mentioned in this post in my personal portfolio. When in 2010 I started the mutual fund I manage, Jubak Global Equity Fund http://jubakfund.com/ , I liquidated all my individual stock holdings and put the money into the fund. The fund did not own shares in OncoGenex as of the end of March. For a full list of the stocks in the fund as of the end of March see the fund’s portfolio at http://jubakfund.com/about-the-fund/holdings/

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