Thursday, July 31, 2014

Making Sense on OncoGeneX

OncoGeneX’s (OGXI - $2.98) stock collapsed in the last four months, losing almost 80% in market value after reporting that its lead asset, the antisense drug custirsen, failed in a pivotal phase III prostate cancer trial. Sporting a market cap of just $60 million and holding more than enough days’ cash on-hand to fund visible clinical catalysts for a second drug that might prove useful in combination with chemotherapy, the company could make for an interesting turnaround play

OGXI is a speculative, micro-cap oncology company – now, essentially a call option with multiple shots on goal: $60 million in cash/equivalents provides a backdrop to a market capitalization of just $60 million; excluding dilutive effect of outstanding options and warrants, and OGXI trades essentially at cash.

Despite an off-putting non-response from management (detailed in article), risk-tolerant investors can own OGXI at its all-time lows ahead of incremental value-driving events. ESMO 2014 may provide hope for failed lead candidate, custirsen, as management should present further analysis from its phase 3 SYNERGY trial. A positive efficacy signal in a subset of patients may drive interest in OGXI once again, ahead of more catalysts into early 2015.