Filing identity and reporting period
The supplied filing is OncoGenex Pharmaceuticals, Inc.’s unaudited Form 10-Q for the quarter ended September 30, 2016, filed November 10, 2016. This does not match the request metadata naming Achieve Life Sciences, Inc.; verify the issuer before relying on this summary.
Business context and financial results
OncoGenex was a clinical-stage biopharmaceutical company developing cancer therapies. It had no product sales; collaboration revenue came from the remaining advance reimbursement under its terminated Teva agreement. The company recognized the full remaining deferred amount by June 30, 2016.
| Metric | Three months ended September 30, 2016 | Nine months ended September 30, 2016 | Comparable 2015 period |
|---|---|---|---|
| Collaboration revenue | $0 | $5.1 million | $6.7 million and $12.1 million, respectively |
| Research and development | $3.8 million | $13.1 million | $8.3 million and $18.5 million |
| General and administrative | $1.9 million | $6.6 million | $3.1 million and $8.9 million |
| Net loss | $3.7 million | $14.3 million | $4.6 million and $15.1 million |
| Basic and diluted loss per share | $0.12 | $0.48 | $0.16 and $0.60 |
| Operating cash flow | $(22.7) million for nine months | $1.6 million provided for nine months |
At September 30, cash and cash equivalents were $11.8 million and short-term investments were $20.7 million, totaling $32.5 million; total current assets were $34.3 million. Total assets were $35.1 million, liabilities $10.7 million, and stockholders’ equity $24.4 million. Accumulated deficit was $191.1 million. Long-term obligations were $0.1 million, plus $0.1 million current; the filing reports no off-balance-sheet financing arrangements.
Material changes and unusual items
- Cash and short-term investments declined from $55.2 million at December 31, 2015 to $32.5 million at September 30, 2016. Operating cash use was $22.7 million, versus operating cash provided of $1.6 million in the prior-year period; the comparison reflects the 2015 Teva advance reimbursement and financing proceeds.
- Lower R&D and G&A spending reflected reduced clinical-trial costs, lower professional fees and the February 2016 workforce reduction. R&D was partly offset by increased ENSPIRIT trial costs after OncoGenex assumed responsibility.
- The company recorded a $1.3 million recovery after reversing a contingent lease-termination liability, following the failure of the AFFINITY trial to meet its primary overall-survival endpoint. It also recorded a $1.4 million Ionis litigation settlement expense and a $0.8 million warrant revaluation gain for the nine-month period.
- In August 2016, OncoGenex settled Ionis litigation with a $1.4 million upfront payment and potential success-based payments capped at $5.0 million. In November, after discontinuing custirsen, the company stated it believed further settlement payments were no longer due, except continuing indemnification obligations.
Outlook, risks and contingencies
Management believed available cash, cash equivalents and short-term investments would fund currently planned operations for at least 12 months, but cautioned that assumptions could prove wrong and additional funding might be needed. The company was exploring strategic alternatives with MTS Health Partners; no transaction was assured. Management warned that failure to complete a transaction could lead the board to consider dissolution and liquidation.
Custirsen development was discontinued after three Phase 3 trials failed to meet their primary overall-survival endpoints. Apatorsen remained in Phase 2 development, but the company said further development depended on a partner, additional funding or a strategic transaction; most apatorsen Phase 2 trials had failed their predefined endpoints. OGX-225 had not been tested in humans, and the company had no plans to advance it without a partner or additional funding.
In October 2016, the company announced a further reduction of 16 positions, approximately 55% of its workforce, expected to be substantially complete in the first quarter of 2017. Anticipated costs were approximately $1.4 million, including possible asset impairments. Other key risks included clinical and regulatory failure, limited financing options, execution risk around strategic alternatives, potential Nasdaq minimum-bid-price delisting by February 21, 2017, and reliance on third-party manufacturers and trial operators. Disclosure controls were assessed as effective at quarter-end.
Important facts for investors to verify
- Confirm the issuer: the filing is for OncoGenex Pharmaceuticals, not the company identified in the request metadata.
- Check subsequent filings for the outcome of the strategic-alternatives process, financing runway and any decision about continued operations or liquidation.
- Verify the status and costs of the October 2016 workforce restructuring and wind-down of custirsen trials and licensing obligations.
- Review subsequent apatorsen trial results, partnership prospects and funding requirements; the filing provides no assured development path.
- Confirm Nasdaq listing compliance and any developments concerning the Ionis settlement, remaining indemnities or patent-abandonment expenses.