OGX011 survival benefit an even better Hazard Ratio.

With the release of ASCO abstracts last night we saw additional data and statistical analyses from OGXIs Phase II trial. This was a randomized, controlled Phase II trial in prostate cancer with their lead compound OGX011, that had shown a 10.6 month survival advantage, including a new multivariate analysis and hazard ratio. Until last night the hazard ratio, (a statistical measure of how much good or harm a treatment does to a patient) the company had presented was 0.6, i.e. patients treated with OGX011 plus docetaxel had a 40% reduction in their death rate versus patients that only received docetaxel. Last night, in the more mature data, this impressive HR of 0.6 was not only maintained, but also further reduced to 0.54, which translated to a further reduction in the death rate to 46%. To put this into context the hazard ratio for Dendreons (DNDN Market Outperform) Provenges successful Phase III trial was 0.775, or a 22.5% reduction in the death rate. To take this interpretation a step further, treatment with OGX011 cut the death rate that Provenges impressive data demonstrated by half.

A look at Hazard Ratios (HR) and Survival Benefits and a caveat

1) HR Provenge 0.775 (22.5% reduction in death rate), OGX011 0.54 (46% reduction in death rate), or OGX011s death rate is half of what it is for Provenge.

2) Survival benefits Taxotere 2.4 months, Provenge 4.1 months, OGX011 10.6 months, Abiraterone has not been demonstrated that it has a survival benefit, just PSA declines, MDV3100 has not been demonstrated that it has a survival benefit, just PSA declines

3) A Caveat on Survival Benefits and HR Taxoteres and Provenges survival benefits were from large Phase III trials, while OGX011 comes from a randomized, yet smaller, Phase II trial of 82 patients

Five points of comparison with Cougar (CGRB Market Perform), a company that also has Phase II data and is trading at an EV of $620M

1) Abiraterone is about one year ahead in development than OGX011, and 2) Abiraterone is an oral agent, vs. OGX011 which is IV, but 3) the two drugs would not compete headtohead with each other, since Abiraterone is oral and mostly going after an earlier patient population, while OGX011 will be used together with Taxotere, and patients would have to go to their oncologists office to receive their chemo treatment anyway. 4) In addition, Abiraterone has only shown a reduction in PSA levels and not a survival benefit, and 5) its data are all from singlearm studies, while the OGX011 data come from randomized, controlled studies

A word on Abiraterone, Valuations and Market Inefficiencies

We believe Abiraterone has shown an impressive efficacy and safety profile and could end up being a clinical and commercial success. We are not trying to imply that one compound is better than the other. We are simply pointing out a major inefficiency in the market (due to the lack of investor awareness for OGXI), that we believe has lead to a disconnect and imbalance between the two companies valuations, which we believe represents an opportunity for investors to benefit from. We are not arguing that CGRB should not be where it is in terms of valuation; we are arguing that OGXI should be trading significantly closer to CGRBs valuation than where it is currently trading.