Douglas Loe: Here’s The Most Underappreciated Drug in Canadian Biotech

Byron Capital Healthcare and Biotech analyst Douglas Loe says OncoGenex Pharmaceuticals’ (OncoGenex Pharmaceuticals Stock Quote, Chart, News: NASDAQ:OGXI) OGX-427 is the most under appreciated drug in Canadian biotech.

This morning, Vancouver-based OncoGenex announced plans for the initiation of the Cedar™ clinical trial, an investigator-sponsored, randomized, open-label Phase 2 trial evaluating OGX-427 in previously untreated patients with advanced squamous cell lung cancer.

The 140 patient Cedar trial will be the seventh randomized Phase 2 clinical trial evaluating OGX-427. It is being conducted by the UK National Cancer Research Network and the UK Experimental Cancer Medicine Network and will involve 35 centres in the UK.

Loe says the clinical pipeline for OGX-427 is large and is growing, including a whopping eight Phase II oncology clinical trials. Four of these trials, he says are sizable, randomized and controlled studies from which credible insights will soon be available. Loe says this asset is often overshadowed by OncoGenex’s own OGX-011, a treatment designed to block the production of clusterin, a cell-survival protein that is over-produced in several malignancies and in response to many cancer treatments.

Loe says OGX-011 accounts for much of the value many attain to the company, so investors buying OncoGenex are getting the potential blockbuster that is OGX-427 essentially for free. In a research update to clients this morning, Loe maintained his BUY rating and $30.50 target on Oncogenex.

The Byron analyst says squamous cell lung cancer is different because it has some biochemical elements that distinguish it from other lung cancer forms, and it tends to not exhibit mutations in certain genes, making to drugs targeting products of these genes as some lung cancer drugs do. Loe says there seems to be a clear medical need for a targeted squamous cell lung cancer-specific agent, and OGX-427 is a serious candidate.

Shares of Oncogenex closed today up 4.6% to $10.64.

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