OncoGenex, Toiling in Dendreon’s Shadow, Scopes Out Partners For Prostate Cancer Drug

Xconomy Seattle — 

Name the Seattle biotech company with a drug shown to help men live longer with prostate cancer, which recently raised cash, is negotiating with potential partners, and has seen its stock boom from as low as $2 to $30 a share yesterday.

Hint: It’s not Dendreon (NASDAQ: DNDN), the developer of the first-of-a-kind treatment for stimulating the immune system against prostate cancer.

Give up?

It’s Bothell, WA-based OncoGenex Pharmaceuticals (NASDAQ: OGXI). This company, which was so obscure at one point last year that zero shares changed hands one day, has suddenly morphed into one of the surprise biotech success stories of 2009. Whereas its neighbor across Lake Washington has been known to unfurl a giant banner proclaiming success, OncoGenex has a way more low-key style. Yesterday, I caught up with CEO Scott Cormack, who dialed in from his office in Vancouver, BC, where he spends part of his time.

How understated is OncoGenex? Last month, when the company decided to raise some money to give it a little more cash cushion while it was negotiating with partners, it could have easily raised $50 million or more, but it only took $9.5 million. And instead of hiring an underwriter to pitch the shares, Cormack and Stephen Anderson, the chief financial officer, just started personally calling institutional investors one Friday afternoon in July. After a couple hours, they sold 475,000 shares at $20 apiece, at just a two percent discount to the prior closing price, without any fancy derivatives, or warrants, and without having to pay any of the usual commissions to a banker. The money should give the company about 10 more months of operating cash, to take it to December 2010, Cormack says.

“We just picked up the phone and started dialing,” Cormack says. “We didn’t have an awful lot of runway left.”

Selling OncoGenex stock was that easy for a reason. Researchers reported the company’s experimental prostate cancer drug, OGX-011, was able to help men live longer than standard chemotherapy in a clinical trial of 82 patients, according to data presented at the American Society of Clinical Oncology (ASCO) meeting in May. Men with terminal prostate cancer who got the OncoGenex drug … Next Page »

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