Trius And OncoGenex Pharmaceuticals: On Their Game

Includes: MRK, OGXI
by: Steven Barnes

Biopharmaceutical company Trius Therapeutics (TSRX) presented a total of 12 tedizolid-related posters and several abstracts, including clinical results and preclinical studies of tedizolid against gram-positive bacterial infections, at the September Interscience Conference on Antimicrobial Agents and Chemotherapy (ICAAC).

Trius, with a Market Cap of 229.73M, is currently trading at $5.82. A look at its 52wk range indicates 4.71 - 8.00, plenty of room to grow there. It is significant though that Zack's recently pegged this at $12.00 with a buy rating, and other analysts project a $60.00 share price moving forward, as the company management continues to be on their game. Here are some of the reasons why the company looks so promising.

Tedizolid is the company's lead product candidate and a promising one for treatment of serious gram-positive infections, including those caused by methicillin-resistant Staphylococcus aureus (MRSA). This effort indicates the continued progress the company has been making on its path towards commercialization.

Clinical abstracts examine the effect of tedizolid in patients with acute bacterial skin and skin structure infections (ABSSSI), as well as liver- and renal-impaired, adolescent and elderly populations. In addition, two poster presentations from the ESTABLISH 1 trial summarized detailed results from Trius' first Phase 3 trial (TR-701-112) of tedizolid in patients with ABSSSI. This marks the first time this data has been presented at a major medical meeting by the company.

Back in December of 2011, the company presented top-line results showing that tedizolid achieved all primary and secondary efficacy outcomes after a short course of therapy. In addition, they showed significant improvements in key safety and tolerability measurements in the complete study population versus linezolid (Zyvox®). This is the first of two registrational studies for tedizolid.

Up next are expected positive results from the company's second Phase 3 study of tedizolid in ABSSSI for its intravenous to oral transition therapy.

The release of the abstracts and presentations, as well as the upcoming second Phase 3 trial, adds to the growing anticipation and excitement of those who follow this company, as they make the long path towards commercialization of what is expected to be a significant and meaningful treatment for the medical community, patients, and investors alike.

OncoGenex Pharmaceuticals (NASDAQ:OGXI)

Also on their game is OncoGenex Pharmaceuticals, which recently released its Q2 2012 earnings report. Their market cap is 202.56M, currently trading at $13.90, a little over midway from their 52wk range of 9.07 - 17.48. OncoGenex develops new cancer therapies that address treatment resistance in cancer patients. Their lead products are Custirsen (which is in phase III clinical trials for the treatment of metastatic castrate resistant prostate cancer), and OGX-427, a product candidate in phase II clinical trials, which is designed to inhibit heat shock protein 27. Its pre-clinical stage products include OGX-225, which is focused on reducing the production of insulin growth factor binding protein-2 (IGFBP) and IGFBP-5, and CSP-9222, a lead compound from a family of caspase activators.

Some clinical development progress for custirsen has been made in both non-small cell lung cancer and castrate-resistant prostrate cancer, or CRPC. An upcoming Phase III trial, known as the ENSPIRIT trial will be an randomized open-label study evaluating the potential survival benefit of combining custirsen with docetaxel in patients with advanced or metastatic non-small cell lung cancer, who have progressed after first-line chemotherapy has failed. The company plans to enroll approximately 1,100 patients and has been designed based on an expected median survival for patients in the control arm to be 9 months and to detect a hazard ratio of 0.8 with 90% power.

Earlier this year, Phase III data from a single-arm study evaluating custirsen in combination with gemcitabine platinum-based regimen in first-line non-small cell lung cancer, was published and the results indicated a median overall survival of 14.1 months and an acceptable safety profile. There has been pre-clinical data suggesting a synergistic effect (and acceptable safety profile) of custirsen with trimetrexate (including in studies of prostate and breast cancer) and custirsen with docetaxel. Docetaxel is globally recognized as a standard of care in second-line treatment for both squamous and non-squamous non-small cell lung cancer, and the second-line market represents a considerable unmet patient need.

Another trial development includes SYNERGY which is the primary registration Phase-III study for custirsen in combination with docetaxel and is evaluating a survival benefit for patients in the first-line chemotherapy setting. With an objective of completion by the end of 2012, 1,000 patients are expected to be enrolled.

Lastly, patient enrollment plans for an AFFINITY trial, a Phase-III clinical study, look to evaluate an overall survival benefit of custirsen when combined with Jevtana as second-line chemotherapy for patients with CRPC. There will be approximately 600 patients throughout North America, Europe, Russia and Australia in this trial. It is based on an estimated median survival for patients in the control arm of 14 months, and to detect the hazard ratio of 0.75 with 85% power or an approximate 25% increase in survival time.

OncoGenex ended the second quarter with approximately $97.6 million in cash and company management expects that to be sufficient for funding into 2015. Their collaboration agreement with Teva will assist in that effort with a $30 million reimbursement payment and additional quarterly expense payments as incurred.

Second quarter revenues (2012) were $2.4 million, as compared to $1.9 million for the prior-year quarter. Second quarter operating expenses were $8.4 million compared with $6.9 million for the same quarter in 2011. The company attributed the higher expenses to clinical trial expenditures. The company's net loss for the second quarter of 2012 was $4.2 million, compared to $6.5 million in the prior-year quarter.

With a significant amount of clinical trial activity planned, it may be expected that high expenses will continue, as well as some planned operating losses. But at an entry point of under $15.00 and plenty of upcoming catalysts associated with each trial, OncoGenex appears to be getting the job done, managing their cash well, and moving forward to a developed product base.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.