Jaime Welch – VP of Marketing and Corporation Communications Scott Cormack – President and CEO John Bencich – SVP, CFO Cindy Jacobs – Chief Medical Officer.

Katherine Xu – William Blair Stephen Willey – Stifel Nicolaus Chad Messer – Needham & Co. Fred Garcia – RBC Good afternoon, ladies and gentlemen, and welcome to the OncoGenex Third Quarter 2014 Earnings Conference Call. My name is Sam and I will be your operator today.

[Operator Instructions] At this time I would like to turn the call over to Jaime Welch, Vice President of Marketing and Corporation Communications at OncoGenex Pharmaceuticals. Please go ahead..

Thank you, Sam, and thanks everyone for joining us. With me today from OncoGenex are Scott Cormack, President and Chief Executive Officer; John Bencich, Chief Financial Officer; and Cindy Jacobs, our Chief Medical Officer.

Before we begin, I'd like to remind everyone that today's conference call contains forward-looking statements based on current expectations. These statements are only predictions and actual results may vary materially from those projected.

Please refer to OncoGenex documents filed with the SEC concerning factors that could affect the company, copies of which are available on our website. I'll now turn the call over to Scott..

Thanks, Jamie. Good afternoon and thank you for joining us. I'd like to begin today by officially welcome John Bencich to his first OncoGenex quarterly earnings call. Welcome, John. As previously announced, John was appointed as Vice President and Chief Financial Officer in August.

John brings to our management team extensive financial leadership and strategic corporate development expertise, both of which are critical for us in this exciting time of growth and opportunity. As outlined in our press release issued earlier today, two important custirsen milestones were reached in the third quarter.

The phase 3 AFFINITY trial successfully completed patient enrollment of 635 men with castrate-resistant prostate cancer. And the phase 3 ENSPIRIT trial completed it first interim futility analyses and is continuing enrollment of patients with non-small cell lung cancer.

Importantly, both AFFINITY and ENSPIRIT are evaluating custirsen in combination with second-line chemotherapy in patients who have experienced disease progression following initial treatments. We believe that target potential mechanisms of treatment resistance is critical in the fight against cancer.

As clusterin is more heavily expressed in tumor cells that have been stressed by treatments, patients in the AFFINITY and ENSPIRIT trials who have advancing disease despite previous treatments may derive a benefit from custirsen therapy. As you know, the final SYNERGY results were reported at ESMO last month.

We look forward to sharing additional data with supportive graphics from further exploratory analyses at our next public investor presentation. These findings support our continued belief in custirsen, particularly in patients with more advanced disease and with poor prognostic factors.

Following the completion of exploratory analyses and improvement in overall survival we've seen in some men who received custirsen treatment in the SYNERGY trial and who had the worst poor prognostic scores across several risk factors.

These risk factors included higher PSA levels, involvement of liver disease, poor performance status, and the use of opiage for cancer pain.

While SYNERGY did not show a significant improvement in overall survival, these additional findings provide us with valuable insights regarding potential patient populations that may benefit from treatment with custirsen, and support our confidence in the ongoing trials evaluating patients with more advanced disease and poor prognostic characteristics.

I'd now like to provide an update on our proprietary product candidate apatorsen and the ORCA program.

This robust development program, which is being conducted in partnership with leading cancer researchers and institutions, is evaluating the potential of apatorsen in four tumor types across seven randomized phase 2 clinical trials, and enrolling nearly 1,000 patients. As a reminder, apatorsen targets heat shock protein 27 or Hsp27.

Hsp27 production increases with cancer treatment as well as with stage and grade. It not only contributes to cancer cell survival, proliferation and migration, but also plays a role in dampening the immune function by inducing a number of immune inhibitory mediators.

Given its role in immune modulation, there could be interesting opportunities to combine apatorsen with some of the emerging checkpoint inhibitors which we are exploring. Metastatic bladder cancer is our lead indication for apatorsen, with key survival data expected by the end of the first quarter of 2015.

This trial, known as Borealis-1, is a randomized placebo controlled phase 2 trial evaluating apatorsen in combination with first-line gemcitabine and cisplatin chemotherapy in 183 patients.

Additionally, Borealis-2, evaluating apatorsen in combination with second-line docetaxel chemotherapy in approximately 200 patients with metastatic bladder cancer, is currently enrolling very well and we expect incomplete accrual late next year.

We're excited about the opportunity in bladder cancer, not only because of the potential to improve patient survival in a disease that has had little progress in decades, but also because of apatorsen supporting clinical data in this disease.

As you may recall, our superficial or muscle-invasive bladder cancer trial evaluating apatorsen via intra-vesicle administration reported a complete response rate of 38% after only one week of treatment.

These data, together with the preclinical data supporting apatorsen in combination with chemotherapy reinforce our enthusiasm and confidence in our current bladder cancer trials.

Additionally, there has been great interest from the bladder cancer community to pursue apatorsen in earlier stages of disease with various combinations and sequencing strategies based on emerging data from the immune checkpoint modulators. We look forward to providing you with additional details as our bladder cancer program unfolds.

We believe apatorsen has great potential beyond bladder cancer as well, with additional trials in non-small cell lung cancer, pancreatic and prostate cancer expected to complete enrollment or report data in the coming year.

Specifically, by the end of the first half of 2015, we expect to announce completion of patient enrollment in both the Spruce trial in non-small cell lung cancer and the Rainier trial in pancreatic cancer. Finally, we expect to submit data from the Pacific trial in prostate cancer to a medical meeting next year.

That concludes the development program update. At this time I'll turn the call over to John who will review our third quarter 2014 financial results.

John?.

Thanks, Scott. We ended September of 2014 with approximately $54 million in cash, cash equivalents and short-term investments. We believe these capital resources will be sufficient to fund our currently planned operations into the third quarter of 2016, and we expect that we would achieve the following milestones.

For apatorsen, the release of Borealis-1 final results and the completion of enrollment and results in both the Spruce and Rainier clinical trials. And for custirsen, the release of final AFFINITY results in late 2015 or early 2016.

Revenue for the nine months ended September 30th increased to $21.5 million, compared with $21.3 million for the same period in 2013. Total operating expenses for the nine months ended September 30th decreased to $44.3 million, compared with $49.6 million for the same period in 2013.

Revenues earned through our collaboration with Teva changes from period to period, largely a result from clinical development activity associated with the AFFINITY trial. Changes in total operating expenses predominantly result from patient enrollment and treatment in the AFFINITY trial and the ongoing apatorsen trials.

Net loss for the third quarter of 2014 was $4.9 million or $0.23 per diluted common share, compared with $10.1 million or $0.68 per diluted common share for the prior-year quarter.

Net loss for the nine months ended September 30th was $20.6 million or $1.21 per diluted common share, compared with $25.2 million or $1.72 per diluted common share for the same period in 2013. That concludes the prepared financial results discussion. I will now turn the call back over to Scott for closing remarks..

Thanks, John. In conclusion, with numerous trials across multiple tumor types, stages of disease, and in combination with various therapies, we're in the midst of an exciting time as we're nearing key enrollment and data milestones.

We have the financial resources to fund our operations into the third quarter of 2016 and an experienced and dedicated team that will enable us to achieve our goals. Thank you again for joining us today, and at this time, I would like to invite the operator, Sam, to open the lines for questions.

Sam?.

Thank you. [Operator Instructions] Our first question comes from Katherine Xu with William Blair. Your line is now open..

Great. Thank you. Good afternoon. So, Scott, on Borealis-1, I'm just wondering how we should expect the data, understand that overall survival is the primary endpoint, but there should be LR [ph] data as well as [indiscernible] as well, and are these correlated? And also, what would the phase 3 design look like --.

Thanks, Katherine, and welcome to the call. So, Borealis-1, you're right, the primary endpoint for that trial is overall survival. But because it is overall survival, we would have the opportunity to collect other information including progression-free survival and response rates.

We would likely do an initial press release with top-line results when we first announce the data, and probably have some of the other data available in a scientific congress, and as you can appreciate, you want to have some of that information so that you have the opportunity to present.

So we don't have, you know, exactly what we present in top line. Obviously the survival would be key and some of the other information probably at the medical conference.

As far as phase 3 design, obviously there would be conceptualization around doing basically a repeat of the Borealis-1 trial, and that would obviously look at the metastatic patient with frontline setting -- combination with frontline chemotherapy. As you know, we also have our Borealis-2 trial which is being conducted in the second-line setting.

That represents a secondary opportunity. And then as I mentioned in the prepared statements, we're looking at a number of other opportunities across the bladder cancer continuum. We're quite interested in obviously what we observed out of our superficial muscle-invasive disease study where we saw the 38% pathologic complete response rate.

And that, you know, is a completely separate actionable item from our perspective that is also interesting that we're looking at opportunities in that whole sort of earlier stage of the disease setting. So there's actually quite a few opportunities for us, with Borealis-1 reading out first.

Now the easy one that would follow would be basically a replicate of the metastatic frontline setting..

Could you remind us the powering assumptions [ph] for Borealis-1 and 2?.

Sure. So I'll turn this one over to Cindy Jacobs since she's here as well, our Chief Medical Officer, and Cindy can take you through some of the stats plans [ph]..

Yeah. And just to remind everybody, the Borealis-1 is looking at two different doses, and so what we will be looking at is the safety profile and a risk benefit assessment for both of those dosage groups. And each comparison has approximately 80% power using a Lobrang [ph] test.

The overall probability of a false positive over the three tests is one-sided 0.15. And what we're really looking at is a trend in hazard ratio. Obviously with 180 patients, we're looking for trend and a statistically significant difference.

If we did get a statistically significant difference, it would have to be for critical hazard ratio ranging between 0.66 and 0.72 for the combined Borealis groups compared to the controlled..

And Borealis-2 I think was also asked..

And Borealis-2 is the same. It has a -- overall survival is the primary endpoint for that, with a little bit different but close to that..

Okay..

Thank you..

Thanks, Katherine..

Thank you. Our next question comes from Stephen Willey with Stifel. Your line is now open..

Yeah. Thanks for taking the questions.

Just on a follow-up to Katherine's question, is the critical hazard ratio that was just mentioned for Borealis-1, is that pulled, the two dosing arms?.

Well, the 0.66 would be closer to each arm and then pulled 0.72. It actually what is, it's a range, it's a table where the various hazard ratio on the powering. With that we'd have 80% power.

I mean one of the most important thing is to - this study is to, one, pick out what does would be the most beneficial dose with the best benefit versus risk or safety profile. But also it will be used to sample-size what would be an appropriate of a phase 3 trial. So that's where that hazard ratio.

Obviously if the hazard ratio is 0.66, then the phase 3 trial can be a smaller size. If it's 0.72 or 0.75, then it's going to be a little larger. So that is really one of the most important aspects of this Borealis-1 study..

Yeah. And just to clarify, Steve, the protocol and the analysis plan does call for basically a by-arm comparison to the control and also has the ability to combine the two treatment arms against the control, which is why there's the two hazard ratios that Cindy was referring to..

Okay.

So those are pre-specified and not dependent upon each arm independently showing [indiscernible] correct?.

Right. There's not a predetermined threshold that has to be achieved in the -- in one of the treatment arms versus the controlled that would trigger the analysis where you pull. That's -- there is no predefined criteria that would drive that secondary step..

Okay..

It's a prospective plan for the analysis with that range and how much would be the 80%, 90% power based on the hazard ratio..

Okay. And then, Scott, you talked about some of the patient characteristics, specifically kind of in the worst prognostic front for which kind of the hazard ratios were skewed towards custirsen.

Do you know what the phase 3 population of AFFINITY looks like right now? Are there any kind of assumptions or any comparisons that can be made just in terms of baseline patient phenotypes relative to some of these poor prognostic indicators that you were able to extract out of SYNERGY?.

We don't have I guess a pulled look at the poor prognostic characteristics of AFFINITY or ENSPIRIT for that matter.

I think the working assumption is that obviously if patients are coming off of prior lines of therapy, there's going to be a host of these prognostic characteristics are probably just putting these patients in a worse state generally than they would be in previous lines of therapy. That's kind of their working assumption in these other trials. Yes.

So obviously that would be something that we'd be looking at as we do the evaluations in both of those studies going forward..

Okay. And then just lastly, the commentary around the apatorsen and potential checkpoint combos.

Would bladder be a seemingly safe place to start or would you also be interested in something like along where we've seen activity in some of these other tumor types already with the PD1 [ph] cast of characters?.

Yeah, I think there's a pretty broad area that we could explore with respect to combinations. As you know from our existing development plan, our ability to partner with other therapies is quite broad. It's not really specific obviously to chemotherapeutic agents or radiation or, you know, different strategies. It's remarkably broad.

I think the benefit with some of these endpoint inhibitors is obviously they're pursuing developments across a pretty broad platform as well, and we're kind of going through that and saying, where is the data strong, where could we potentially combine with potential synergy as well.

I think it's quite interesting as we start to look at the totality of the Hsp27 story, we've been really focused in this area, its role in development of treatment resistance.

And we talk about tumors and their ability to do what they do within the human body with proliferation and escaping cell death triggers and migration, all of which we've talked about in various calls and presentations and the role of Hsp27. The sort of new area makes a lot of sense when you think about it.

If a tumor is going to be able to proliferate, migrate and do those things, it would make logical sense that it is also finding a way to hide from the immune system, and in fact that's a lot of what these papers are starting to generate, is Hsp27 is really compromising the immune surveillance, if you will, and allowing tumors to be hiding.

But the role of Hsp27 in this mechanism is quite distinct. So if you think about CTLA-4 as just an example, you're basically putting the brakes on T-cell activation, whereas the role of Hsp27 is actually to drive that response. So you can see there's some really nice synergy. They're basically in opposites.

So there's just a lot of different areas that we can go to.

And I think disease-specific, our role is going to be trying to identify the therapeutic areas where there's going to be sort of natural opportunities for us to come combine the markets and the size in the markets and patient population, and especially the need is going to drive that direction and the biology..

Interesting. Appreciate the color. Thank you..

Yeah. And Steve, you'll see a fair bit more about that part of the story as we get into especially a lot of the investor conferences. As I alluded to in the prepared statements, we want to take some of that SYNERGY data and give some of the graphics that are behind some of the observations that we saw in the exploratory analyses.

I think pictures are worth a thousand words, and while we're giving some of the text behind this, I think seeing the visuals will help really drive home what we've been observing. And then we're going to be doing the same thing as we start to speak to the mechanism of action for immune modulation for Hsp27.

And again, I think as you see those diagrammatic expressions start to unfold, that'll really capture the story a lot better and see the totality of the Hsp27 potential that we're seeing across a number of ways that tumors are basically taking hold in the bodies of people..

Okay. We'll be looking forward to that. Thanks..

Thanks a lot, Steve..

[Operator Instructions] Our next question comes from Chad Messer with Needham & Co. Your line is now open..

Great. Thanks for taking my question. A lot of interesting discussion. So it makes total sense to me that, you know, these findings from SYNERGY showing patients with poor prognostic indicators are potentially doing better, that that would certainly bode well for the other two programs.

But is there -- do you or the investigators or do preclinical data, is there any hypotheses as why that would be true? And you mentioned you'll have further data analyses at investor conferences.

Is it possible to explain or at least tell us what kinds of further analyses we might look forward to?.

Yes. So I think the analyses that we're referring to is just getting a look at some of the pectoral analyses that we've kind of talked to that are described in the statements that we have made.

So for example, how does -- take liver mets for example, I think that's one of the ones that were mentioned, patients that have liver mets, how do those patients fare in the controlled group versus the treatment group. And when you see sort of the breakout of that, I think it becomes fairly apparent.

Same thing is true when you look at rising PSAs and the like. So I think that's really what we're talking about, is showing some of that aspect.

The second part of your question, or I guess it was actually the first part of your question, is how this looks in the context of, say, the AFFINITY trial and how those patient characteristics may reflect some of these more advanced poor prognostics.

And that's the harder piece of looking at this because most of what we're talking about is trying to correlate poor prognostics factors versus patients that are de facto I'd say more resistant. And those are hard correlations because poor prognostics and resistance don't necessarily exactly tie.

But obviously as patients go through lines of therapy, they end up with worse health status, obviously. That's part of -- and especially I think that's true with prostate cancer where patients tend to have a loss in performance status, which is what ends up [indiscernible]..

Great. Thanks..

Right. Thanks, Chad..

Thank you. Our next question comes from Fred Garcia with RBC. Your line is now open..

Hi, Scott.

I was wondering, I came on a little late, did you discuss your relationship with Teva now that they've deprioritized some of their late-stage assets?.

Yeah. We didn't go through specific comments with regards to Teva, other than as it relates to the ongoing AFFINITY trial and the ENSPIRIT trial. So as you may have missed the comments that were made, there's two critical events that have occurred with those trials.

The first, with respect to AFFINITY, is we completed patient accrual, 635 patients, in this last quarter. And now obviously doing the treatment follow-ups for those patients that are still on treatment, and then you'd be in survival follow-up, which is obviously the final stages of that particular trial.

And then as it relates to ENSPIRIT, there was a futility assessment that was planned in this study and we recently cleared that utility assessment which triggers the escalation of that study and basically a more aggressive enrollment strategy and broadening. So, clearing that, both of those trials are obviously in a forward position..

Okay, thanks.

So there's no changes to the commercialization agreements and all that?.

Right now we're just focused on the clinical trials.

Teva's role in -- I think we've been dealing with a lot of their strategic shifts over the last couple of years and difficult to anticipate what they may be doing in the future, so, you know, at this point we remain completely focused on our development strategies and plans and can't really comment on what they might do in the future..

Okay. Thanks..

Thanks, Fred..

Thank you. And at this time I'm showing no further questions. I would like to turn the call back over to CEO Scott Cormack for further remarks..

Thanks, Sam. Just want to conclude this call by saying thank you everybody for joining us, and we look forward to providing you with future updates in the not too distant future. Thank you very much..

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may now disconnect..