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OncoGenex Pharmaceuticals, Inc. Reports Financial Results for Second Quarter 2011 and Provides Update on Development Activities

Second Quarter 2011 Highlights

    --  Expected timing of results from the survival primary endpoint for the
        custirsen SYNERGY Phase 3 clinical trial remains unchanged at Q4 2013.
        --  During discussions regarding the SATURN Special Protocol Assessment,
            or SPA, amendment, FDA stated that an application supported
            primarily by the results of SYNERGY alone would be acceptable for
            submission.
    --  We have revised the custirsen SATURN Phase 3 trial protocol to expand
        the eligible patient population, and to align with the recently approved
        chemotherapy, cabazitaxel.
        --  We are awaiting final, written FDA agreement on the SPA amendment
            that will allow patients to receive either docetaxel re-treatment or
            cabazitaxel as second-line chemotherapy.
        --  Recruitment efforts are ongoing to enroll more patients in the
            SATURN study, which has had few patients accrued due to restrictive
            enrollment criteria regarding docetaxel retreatment and stable pain
            criteria. Expected timing of results for the pain palliation primary
            endpoint is now projected to be Q4 2013 rather than Q2 2013.
    --  The initiation of the Phase 3 clinical trial evaluating custirsen in
        patients with non-small cell lung cancer (NSCLC) has been delayed as we
        determine the optimal chemotherapeutic combination based on safety
        considerations and the current and evolving standard of care.
        --  We believe NSCLC is a promising indication and remain committed to
            the advancement of custirsen in NSCLC.
    --  OGX-427
        --  Enrollment continues for both the investigator-sponsored, randomized
            Phase 2 clinical trial evaluating OGX-427 in patients with
            castrate-resistant prostate cancer, and the investigator-sponsored
            Phase 1 trial evaluating OGX-427 in patients with superficial
            bladder cancer. We expect results from both trials in 2012,
            unchanged from previous guidance.
        --  We expect to initiate the randomized Phase 2 clinical trial of
            OGX-427 in approximately 180 patients with metastatic bladder cancer
            in the second half of 2011.

Financial Results

    --  Revenue for the second quarter increased to $1.9 million compared with
        $1.7 million in 2010. Revenue for the six months ended June 30, 2011
        decreased to $3.1 million from $6.4 million in 2010. Revenue is earned
        through reimbursements received under the Teva collaboration, as well as
        recognition of upfront payments we received from Teva.
        --  Revenue increased for the second quarter of 2011 due to increased
            efforts associated with the custirsen Phase 3 clinical trials.
        --  Revenue decreased during the six months ended June 30, 2011 due to
            custirsen manufacturing activities now being paid directly by Teva.
        --  As of June 30, 2011, $19.9 million of the $30.0 million upfront
            payment received from Teva in December 2009 was included in our
            Balance Sheet as Deferred Collaboration Revenue, which we are
            recognizing as we perform our deliverables under the agreement. We
            currently expect this performance period to end in the fourth
            quarter of 2013.
    --  Total operating expenses for the second quarter increased to $6.9
        million from $4.6 million in the second quarter of 2010.  Total
        operating expenses for the six months ended June 30, 2011 also increased
        to $13.3 million from $12.3 million during the same period in 2010.
        --  The increase in operating expenses was primarily due to higher
            manufacturing and clinical trial costs for OGX-427, and higher
            employee expenses, offset by lower custirsen manufacturing costs
            that are now being paid directly by Teva.
    --  Net loss for the second quarter of 2011 increased to $6.5 million, or
        $0.67 per diluted common share, compared to net income of $0.2 million,
        or $0.02 per diluted common share, in the second quarter of 2010. Net
        loss for the six months ended June 30, 2011 increased to $9.6 million,
        or $0.99 per diluted common share, compared to net loss of $2.9 million,
        or $0.45 per diluted common share, in the same period of 2010.
        --  An income tax recovery of $3.0 million was recorded in the second
            quarter of 2010, in relation to the Collaboration Agreement with
            Teva.
    --  We had $75.4 million in cash, cash equivalents and short-term
        investments as of June 30, 2011, compared to $85.1 million as of
        December 31, 2010. As at August 1, 2011, we had 9,725,489 shares
        outstanding.

Conference Call Details

OncoGenex will host a conference call at 4:30 p.m. Eastern Time today, Thursday, August 4, 2011, to provide a business update and discuss the second quarter financial results. A live event will be available through the Events and Presentations Web page found in the Investor Relations section of the OncoGenex Web site at www.oncogenex.com . Alternatively, you may access the live conference call by dialing (877) 606-1416 (U.S. & Canada) or (707) 287-9313 (International). A webcast replay will be available approximately two hours after the call and will be archived on www.oncogenex.com for 90 days.

About OncoGenex Pharmaceuticals

OncoGenex is a biopharmaceutical company committed to the development and commercialization of new cancer therapies that address treatment resistance in cancer patients. OncoGenex has a diverse oncology pipeline, with each product candidate having a distinct mechanism of action and representing a unique opportunity for cancer drug development. OncoGenex and Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVA) have entered a global collaboration and license agreement to develop and commercialize OncoGenex' lead drug candidate, custirsen. Custirsen is currently in Phase 3 clinical development as a treatment in men with metastatic castrate-resistant prostate cancer. The companies plan to begin Phase 3 development of custirsen in first-line treatment of advanced, unrespectable non-small cell lung cancer. OGX-427 is in Phase 2 clinical development; CSP-9222 and OGX-225 are currently in pre-clinical development.

OncoGenex' Forward Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning our anticipated product development activities, such as expected clinical trial initiation and completion dates, patient enrollment targets, proposed amendments to our ongoing clinical trial design and the timing and possibility for approval by the FDA thereof, the timing and costs of our product development activities and the potential benefits of our product candidates. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, including, among others, the risk of delays in our expected clinical trials and the uncertainties regarding patient enrollment rates, the risk that the FDA does not approve our proposed amendment to the Saturn trial design in a timely fashion or at all, the risk that our product candidates do not obtain the requisite regulatory approvals to commercialize, the risk that new developments in the rapidly evolving prostate cancer therapy landscape require additional changes in our clinical trial design or limit the potential benefits of our product and the other factors described in our risk factors set forth in our filings with the Securities and Exchange Commission from time to time, including the Company's Quarterly Report on Form 10-Q for second quarter ended June 30, 2011. The Company undertakes no obligation to update the forward-looking statements contained herein or to reflect events or circumstances occurring after the date hereof, other than as may be required by applicable law.

                     Condensed Consolidated Statements of Operations
                                     (in thousands)

                                 Three months              Six months
                                Ended June 30,           Ended June 30,
                                  2011         2010         2011         2010
                           (unaudited)  (unaudited)  (unaudited) (unaudited)
    Collaboration
     revenue                    $1,887       $1,701       $3,086       $6,401

    Operating expenses
       Research and
        development              5,409        3,079       10,262        9,459
       General and
        administrative           1,471        1,475        3,042        2,825
                                 -----        -----        -----        -----
    Total operating
     expenses                    6,880        4,554       13,304       12,284
    Loss from operations         4,993        2,853       10,218        5,883
    Other income
     (expense)                  (1,537)           7          643           (7)
                                ------          ---          ---          ---
    Loss for the period
     before taxes                6,530        2,846        9,575        5,890
        Income tax expense
         (recovery)                  -       (3,000)           -       (3,000)
                                   ---       ------          ---       ------
    Net loss                    $6,530        $(154)      $9,575       $2,890
                                ------        -----       ------       ------
    Basic and diluted
     loss per common
     share                        0.67        (0.02)        0.99         0.45
    Weighted average
     number of common
     shares
    Basic                    9,718,251    6,400,081    9,715,846    6,366,861
    Diluted                  9,718,251    6,529,482    9,715,846    6,366,861

                   Condensed Consolidated Balance Sheets
                               (in thousands)

                                                 June 30,       December 31,
                                                        2011             2010
                                               (unaudited)
    Assets:
      Cash, cash equivalents and short term
       investments                                   $75,412          $85,107
      Amounts receivable                               1,498            1,224
      Prepaid and other current assets                 1,899            2,987
      Property, equipment and other assets               716              600
    Total assets                                      79,525          $89,918
                                                      ======          =======

    Liabilities and stockholders' equity:
      Accounts payable and accrued expenses            1,643             $893
      Current deferred collaboration
       revenue                                        10,000           10,000
      Warrant liability                               14,828           15,269
      Other current liabilities                        1,384            1,314
      Long term liabilities                           16,472           18,317
      Stockholders' equity (deficiency)               35,198           44,125
    Total liabilities and stockholders'
     equity (deficiency)                              79,525          $89,918
                                                      ======          =======

SOURCE OncoGenex Pharmaceuticals, Inc.