OncoGenex Pharmaceuticals decided it needed to spend more money on the final stage of clinical trials for its prostate cancer drug, so today it went out and raised a lot more cash.
The Bothell, WA and Vancouver, BC-based company (NASDAQ: [[ticker:OGXI]]) said today it has raised $50 million through an underwritten stock offering. The company sold about 4.2 million new shares at $12 apiece. That price represented a massive 31 percent discount to OncoGenex’s closing stock price of $17.43 yesterday, and the dilutive effect of having 4.2 million new shares in the market helped drive down OncoGenex stock more than 20 percent, to $13.89 at noon Eastern today.
Leerink Swann and Stifel Nicolaus Weisel are leading the offering, with assistance from Lazard Capital Markets and William Blair & Co. The company expects to get about $46.8 million after expenses and fees from the transaction.
The offering comes a little more than a week after OncoGenex said it was overhauling its Phase III clinical development plan for custirsen, a treatment for prostate cancer being developed in collaboration with Teva Pharmaceutical. OncoGenex and Teva said last week they were closing down one clinical trial of 300 patients because of slow enrollment, and replacing it with another study of 630 men that will recruit a sicker population of men getting their second round of chemotherapy. Another trial, called Synergy, was expanded from 800 patients to 1,000 to get enough patients in a database to satisfy regulators, the company said. Both Synergy, and the new 630-patient trial, are supposed to answer whether the OncoGenex drug can help men live longer with prostate cancer.
The new plan—designed to help OncoGenex differentiate itself in a crowded market against Dendreon, Johnson & Johnson, Medivation, and Exelixis—is considerably raising OncoGenex’s expenses this year. The company entered this year with $65 million of cash and investments in the bank, and said last week that it expected to burn through $40 million to $45 million of those reserves this year. Results from the Synergy trial are expected by the fourth quarter of 2013, and OncoGenex has said previously it had enough money to run the business into 2014.
