##### Table of Contents



UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 033-80623
 OncoGenex Pharmaceuticals, Inc.
  Delaware
    
    95-4343413(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 1522
 217th Place SE, Suite 100, Bothell, Washington 98021
 (425) 686-1500
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Exchange on Which RegisteredCommon Stock, par value $0.001 per share
    
    The NASDAQ Capital Market
  None
 o No þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
  DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



OncoGenex Pharmaceuticals, Inc.
 Table of Contents
 PART IITEM 1. BUSINESS
    
    
    3ITEM 1A. RISK FACTORS
    
    
    26ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    43ITEM 2. PROPERTIES
    
    
    43ITEM 3. LEGAL PROCEEDINGS
    
    
    43ITEM 4. REMOVED AND RESERVED
    
    
    43PART IIITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
    
    
    44ITEM 6. SELECTED FINANCIAL DATA
    
    
    46ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    47ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
    
    
    66ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    67ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    100ITEM 9A. CONTROLS AND PROCEDURES
    
    
    100ITEM 9B. OTHER INFORMATION
    
    
    100PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    101ITEM 11. EXECUTIVE COMPENSATION
    
    
    101ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    101ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE
    
    
    102ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    102PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    
    
    103Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




---



##### Table of Contents



PART I
 References in this Form 10-K to OncoGenex Pharmaceuticals, OncoGenex, the Company, we, us
or our refer to OncoGenex Pharmaceuticals, Inc. and its wholly owned subsidiaries. The
information in this Annual Report on Form 10-K contains certain forward-looking statements,
including statements related to clinical trials, regulatory approvals, markets for our products,
new product development, capital requirements and trends in its business that involve risks and
uncertainties. Our actual results may differ materially from the results discussed in the
forward-looking statements. Factors that might cause such a difference include those discussed in
Business, Risk Factors and Managements Discussion and Analysis of Financial Condition and
Results of Operations, as well as those discussed elsewhere in this Annual Report on Form 10-K.
 
 ITEM 1.
    
    BUSINESS
 Overview of Our Business
  Product Candidates Overview and Recent Developments
  Custirsen
  
    
    A phase 3 clinical trial, referred to as the Prostate Cancer SATURN trial, or SATURN, to
evaluate a durable pain palliation benefit for custirsen in combination with docetaxel
retreatment as second-line chemotherapy in approximately 300 patients with metastatic
castrate-resistance prostate cancer, or CRPC, which was initiated in the second quarter of
2010.
 
    
    A phase 3 clinical trial, referred to as the Synergy trial, or SYNERGY, to be conducted
in approximately 125 cancer centers to evaluate a survival benefit for custirsen in
combination with first-line docetaxel treatment in approximately 800 patients with CRPC,
which was initiated in the third quarter of 2010.
 
    
    A phase 3 clinical trial to evaluate a survival benefit for custirsen in combination
with first-line chemotherapy in patients with non-small cell lung cancer, or NSCLC, which is expected to be initiated in
2011 following successful manufacturing of additional custirsen drug product and completion of drug-drug interaction,
or DDI, studies. The trial is expected to enroll approximately 950 patients. The
study protocol will include two futility assessments and one interim analysis for efficacy.
The first-line chemotherapy regimen has been selected as carboplatin and paclitaxel.
  3




---



##### Table of Contents




    
    We are required to contribute $30 million towards development of custirsen, which will
include our personnel costs for certain development activities.
 
    
    Teva is required to fund all other expenses under the Clinical Development Plan.
   OGX-427
      4




---



##### Table of Contents



SN2310, OGX-225 and CSP-9222
    Financial Overview
     Recent Corporate History
    5




---



##### Table of Contents



Our Product Candidates
  Custirsen
 Overview of Custirsen
     
    
    longer survival duration when adding custirsen to first-line docetaxel compared to
first-line docetaxel alone in patients with CRPC within a randomized phase 2 trial;
 
    
    longer survival duration when adding custirsen to either mitoxantrone or docetaxel as
second-line chemotherapy compared to survival duration observed in two prior published
trials of CRPC patients receiving second-line chemotherapy and comparable survival to
cabazitaxel that was recently approved in the United States in 2010. One study evaluated
patients with better prognostic risk factors who received docetaxel as second-line
chemotherapy, which study, or the BCCA Study, was conducted at the British Columbia Cancer
Agency and presented at the ASCO Genitourinary Conference in 2008. The second study was the
follow-up evaluation of patients on the TAX 327 Study who later received second-line
chemotherapy, which was presented at the ASCO 2007 Prostate Cancer Symposium. The TAX 327
Study was the key registration study that showed a survival benefit for docetaxel over
mitoxantrone for first-line chemotherapy treatment of patients with metastatic CRPC. A
Phase 3 trial comparing mitoxantrone to cabazitaxel as second-line chemotherapy for
patients with CRPC, referred to as the TROPIC trial, and was the key registration study
that showed a survival benefit for cabazitaxel over mitoxantrone for second-line
chemotherapy treatment of patients with metastatic CRPC. The reported median survival for
second-line chemotherapy in most trials has been approximately 10 months (range 9-12 months)
with the exception that the TROPIC trial showed median survival to be 15.1 months for
patients treated with cabazitaxel;
  6




---



##### Table of Contents




    
    post-treatment serum clusterin levels were lower compared to baseline levels and the
average serum clusterin levels were predictive of survival in preliminary analysis;
 
    
    increased frequency of pain responses when compared to pain responses from either
mitoxantrone or cabazitaxel second-line chemotherapy in the phase 3 TROPIC trial, and
increased frequency and duration of pain palliation when adding custirsen to either
mitoxantrone or docetaxel as second-line chemotherapy compared to the frequency and
duration of pain palliation observed in the TAX 327 Study for first-line chemotherapy alone
in patients with CRPC; and
 
    
    longer survival duration when adding custirsen to gemcitabine and a platinum-containing
chemotherapy compared to the survival duration reported in prior published results from
randomized clinical trials in NSCLC patients receiving gemcitabine and a
platinum-containing chemotherapy.
    Summary of Custirsen Product Registration Strategy
  
    
    The phase 3 SATURN trial to evaluate a durable pain palliation benefit for custirsen in
combination with docetaxel retreatment as second-line chemotherapy in approximately 300
patients with CRPC, which was initiated in the second quarter of 2010.
 
    
    The phase 3 SYNERGY trial to be conducted in approximately 125 cancer centers to
evaluate a survival benefit for custirsen in combination with first-line docetaxel
treatment in approximately 800 patients with CRPC, which was initiated in the third quarter
of 2010.
 
    
    A phase 3 clinical trial to evaluate a survival benefit for custirsen in combination
with first-line chemotherapy in patients with NSCLC, which is expected to be initiated in
2011 following successful manufacturing of additional custirsen drug product and completion
of DDI studies. The trial is expected to enroll approximately 950 patients. The study
protocol will include two futility assessments and one interim analysis for efficacy. The
first-line chemotherapy regimen has been selected as carboplatin and paclitaxel.
   7




---



##### Table of Contents



Summary of Results of Custirsen Phase 2 Clinical Trials
  Summary of Final Results of Custirsen Phase 2 Clinical Trial in Patients With CRPC Receiving
Custirsen and Docetaxel as First-Line Chemotherapy
   
    
    The median overall survival in patients who were treated in the custirsen plus docetaxel
trial was 23.8 months compared to 16.9 months for patients treated with docetaxel alone,
indicating a 6.9 month survival advantage in the custirsen arm.
 
    
    The unadjusted hazard ratio, or HR, a measure used to compare the death rates between
treatment groups, was 0.61, representing a 39% lower rate of death for patients treated
with custirsen.
 
    
    A prospectively defined multivariate analysis indicated that the significant predictors
of overall survival were treatment arm, performance status and presence of metastases other
than in bone or lymph nodes. In the multivariate analysis, patients treated with custirsen
had a rate of death of 51% lower than patients treated with docetaxel alone (HR=0.49;
p=0.012). Additional exploratory analyses found that the lower rate of death was associated
with the effect of custirsen treatment even when varying amounts of chemotherapy were
administered. In other words, custirsen treatment resulted in a lower rate of death when
compared to the control arm for patients receiving six or less cycles of chemotherapy, as
well as for patients receiving 10 cycles of chemotherapy.
   8




---



##### Table of Contents



Summary of Results of Custirsen Phase 2 Clinical Trial in Patients Receiving Docetaxel as
Second-Line Therapy
   9




---



##### Table of Contents




    
    Survival duration is longer than the survival duration observed in the follow-up
evaluation of patients on the TAX 327 Study who later received second-line chemotherapy and
were available for long-term follow-up. In the follow-up evaluation of the TAX 327 Study,
237 patients received either docetaxel or mitoxantrone as second-line chemotherapy. The
median (50%) survival duration from the start of second-line chemotherapy was 10 months for
both groups of patients (patients receiving mitoxantrone as second-line chemotherapy after
receiving docetaxel as first-line chemotherapy or patients receiving docetaxel as
second-line chemotherapy after receiving mitoxantrone as first-line chemotherapy). As of
August 13, 2010, the estimated median over survival duration for the custirsen plus
mitoxantrone arm was 11.5 months (95% C.I.: 6.1-15.2 months). For the custirsen plus
docetaxel retreatment arm, the median overall survival was estimated at 15.8 months (95%
C.I.:9.9-23.3 months) for the 20 randomized patients and 12.8 months (95% C.I.:9.9-17.0
months) for the 45 combined patients which included 25 additional patients with high serum
clusterin levels at enrolment beyond the 20 randomized patients.
 
    
    The survival data from this clinical trial also compares favorably to the median
survival duration of 9.6 months for patients who received second-line docetaxel after
first-line docetaxel in the retrospective BCCA Study. The patients in the BCCA Study had a
better prognosis than the patients in our clinical trial.
 
    
    Preliminary analyses have shown that treatment with custirsen in combination with
chemotherapy significantly lowers serum clusterin levels and that average serum clusterin
levels were predictive of survival, with low serum clusterin levels correlating to longer
survival.
 
    
    Pain responses were observed in 46% of evaluable patients in the mitoxantrone group and
59% of evaluable patients in the docetaxel retreatment combined group. Evaluable patients
had pain or were on opioids for pain control. Durable pain responses (defined as duration
of 12 weeks or greater) were observed in 38% of evaluable patients in the mitoxantrone
group and 51% of evaluable patients in the docetaxel retreatment combined group.
 
    
    Pain responses when adding custirsen to docetaxel treatment as second-line therapy were
favorable when compared to the pain responses reported for the Phase 3 TROPIC trial leading
to the 2010 approval of cabazitaxel in the United States for patients who had previously
received treatment with chemotherapy. In the TROPIC trial, which evaluated a similar
patient population for second-line chemotherapy as was evaluated in our Phase 2 trial
(i.e., patients who had progressed while on or soon after first-line docetaxel therapy),
the pain response for cabazitaxel was 9.2% and for mitoxantrone was 7.7%. The reported
median survival for second-line chemotherapy in most trials has been approximately 10
months (range 9-12
months) with the exception that the TROPIC trial showed median survival to be 15.1 months
for patients treated with cabazitaxel.
 Summary of Preliminary Results of Custirsen Phase 2 Clinical Trial in Patients With NSCLC
  
    
    the median overall survival was 14.1 months and 54% of patients survived at least one
year;
 
    
    30% of patients who had received custirsen with first-line chemotherapy survived at
least two years;
 
    
    for comparison, published studies using a platinum-based regimen plus gemcitabine as
first-line chemotherapy for advanced NSCLC reported median survivals of 8 to 11 months and
one-year survival rates of 33% to 43%. Market approval for Avastin plus paclitaxel and
carboplatin chemotherapy for NSCLC was based on results showing a median survival of 12.3
months compared to 10.3 months for patients treated with chemotherapy alone. Survival rates
for Avastin plus chemotherapy versus chemotherapy alone were reported as 51% versus 44% at
one year and 23% versus 15% at two years, respectively;
 
    
    disease control was achieved in 69% of patients; and
 
    
    preliminary analyses have shown that treatment with custirsen in combination with
gemcitabine and a platinum chemotherapy significantly lowers serum clusterin levels and
that average serum clusterin levels were predictive of survival, with low serum clusterin
levels correlating to longer survival.
  10




---



##### Table of Contents



Summary of Preliminary Results of Custirsen Phase 2 Clinical Trial in Patients With Advanced
Breast Cancer
  Summary of Preliminary Results of Custirsen Phase 2 Clinical Trial in Patients With CRPC
Receiving Hormone Ablation Therapy
  OGX-427
 Overview of OGX-427
   Summary of Results of OGX-427 Phase 1 Clinical Trial in Patients With Solid Tumors
     11




---



##### Table of Contents



Summary of Ongoing OGX-427 Randomized Phase 2 Clinical Trial in Patients With CRPC
  Summary of Ongoing OGX-427 Phase 1 Clinical Trial in Patients With Bladder Cancer
  Summary of Proposed OGX-427 Randomized Phase 2 Clinical Trial in Patients With Metastatic
Bladder Cancer
  SN2310
   12




---



##### Table of Contents



OGX-225
    CSP-9222
  Second-Generation Antisense Technology
   13




---



##### Table of Contents



Summary of Product Development Programs
  Recent and Expected NearProduct Candidate
    
    Cancer Indication and Study
    
    Treatment Combination(1)
    
    Development Phase/Status
    
    Term Data ReleasesCustirsen phase 3 (2)
    
    Metastatic Castrate Resistant Prostate Cancer  Survival Endpoint
(SYNERGY)
    
    First-line docetaxel with and without custirsen (~800 patients)
    

   Phase 3 ongoing; SPA approved by the FDA and
EMA in agreement with development plan
    
       Phase 3 initiated in third quarter of 2010. Teva has primary
responsibility for the oversight of this trialMetastatic Castrate Resistant Prostate Cancer  Durable Pain Palliation Endpoint
(SATURN)
    
    Docetaxel retreatment as second-line chemotherapy with and without
custirsen (~300 patients)
    
       Phase 3 ongoing; SPA approved by the FDA and
EMA in agreement with development plan
    
       Phase 3 initiated in the second quarter of 2010. OncoGenex has
primary responsibility for the oversight of this trialAdvanced Non-Small Cell Lung Cancer  Survival Endpoint
    
    Chemotherapy with or without custirsen
(Protocol not yet disclosed)
    
       Initiation pending in 2011
    
       Expected to initiate in 2011. Teva has primary responsibility for
the oversight of this trialCustirsen phase 2
    
    Metastatic Castrate Resistant Prostate Cancer
(OGX-011-03)
    
    First-line docetaxel with and without custirsen
    
       Phase 2 completed
    
       Final survival data presented at 2009 ASCO annual meeting
   Data published in Journal of Clinical Oncology September 2010Metastatic Castrate Resistant Prostate Cancer
(OGX-011-07)
    
    Custirsen with second-line chemotherapy (docetaxel or mitoxantrone)
    
       Phase 2 completed
    
       Interim data presented at ASCO 2008 Genitourinary Cancers Symposium
   Manuscript in preparationMetastatic Castrate Resistant Prostate Cancer
(OGX-011-07A)
    
    Custirsen with docetaxel as second-line chemotherapy
    
       Phase 2 completed
    
       Manuscript in preparationAdvanced Non-Small Cell Lung Cancer
(OGX-011-05)
    
    Custirsen with first-line chemotherapy (gemcitabine and cisplatin or
gemcitabine and carboplatin)
    
       Phase 2 completed
    
       2-year survival data presented February 2009
   Manuscript in preparationLocalized Prostate Cancer
(OGX-011-04)
    
    Custirsen with hormone ablation therapy
    
       Phase 2 completed
    
       Results presented at ASCO 2008 Genitourinary Cancers SymposiumAdvanced Breast Cancer
(OGX-011-06)
    
    Custirsen with docetaxel as second-line chemotherapy
    
       Phase 2 completed
    
       Data published in Clinical Cancer Research 2009Custirsen phase 1
    
    Localized Prostate Cancer
(OGX-011-01)
    
    Custirsen with hormone ablation therapy
    
       Phase 1 completed
    
       Data published in Journal of National Cancer Institute 2005Solid Tumors
(prostate, breast, NSCLC, ovarian, renal, bladder, peritoneum)
(OGX-011-02)
    
    Custirsen with docetaxel
    
       Phase 1 completed
    
       Data published in Clinical Cancer Research 2008OGX-427 phase 2
    
    Castrate Resistant Prostate Cancer
    
    OGX-427 as monotherapy (72 patients)
    
       Phase 2 ongoing.
    
       Phase 2 initiated in the third quarter of 2010.Metastatic Bladder Cancer
    
    OGX-427 with and without chemotherapy (~ 180 patients)
    
       Initiation pending.
    
       Expected to initiate in the second half of 2011.OGX-427 phase 1
    
    Solid Tumors
    
    OGX-427 with and without chemotherapy
    
       Phase 1 completed
    
       Final data presented at 2010 ASCO annual meetingSuperficial Bladder Cancer
    
    OGX-427 as monotherapy (~36 patients)
    
       Phase 1 ongoing
    
       NoneSN2310
    
    Solid Tumors
    
    SN2310 administered to heavily pre-treated patients with advanced cancer
    
       Phase 1 completed
    
       Enrollment and treatment completed  maximum tolerated dose
determinedOGX-225
    
    Solid Tumors
    
    OGX-225 with and without chemotherapy
    
       Pre-clinical proof-of-concept studies
completed
    
       NoneCSP-9222
    
    Solid Tumors
    
    To be determined
    
       Formulation to be determined
    
       None
 (1)
    
    In all of our prostate cancer clinical trials and in clinical practice for prostate
cancer, docetaxel is administered in combination with prednisone.(2)
    
    We have designed two phase 3 clinical trials to evaluate the clinical benefit of custirsen in
CRPC.  14




---



##### Table of Contents



Overview of Market and Treatment
   Our Strategy
  
    
    Gaining market approval for custirsen by conducting registration trials that demonstrate
efficacy and safety, in both prostate and lung cancer, in collaboration with Teva. As a
result of the Collaboration Agreement with Teva, committed funding is available for phase 3
trials in patients with CRPC to evaluate custirsen in combination with docetaxel as
first-line chemotherapy, in patients with CRPC to evaluate custirsen in combination with
docetaxel retreatment as second-line chemotherapy, and in patients with NSCLC to evaluate
custirsen in combination with first-line chemotherapy. The prostate trials were initiated
in 2010 and the NSCLC trial is expected to begin in 2011. Currently, mitoxantrone,
docetaxel and cabazitaxel are approved for use in patients with advanced CRPC, but
docetaxel and cabazitaxel have shown improved patient survival when compared to
mitoxantrone. Currently, carboplatin, gemcitabine and cisplatin are approved for use in
patients with advanced NSCLC and bevacizumab in patients with non-squamous NSCLC;
bevacizumab in combination with paclitaxel and carboplatin chemotherapy has shown to
improve patient survival when compared to carboplatin chemotherapy alone. Pemetrexed is
also approved as a single agent in patients with advanced NSCLC after initial chemotherapy
and in combination with cisplatin for the initial treatment and maintenance therapy
following platinum-based therapy.
 
    
    Advancing OGX-427 by conducting clinical trials across multiple cancer indications for
OGX-427, including, but not limited to, bladder cancer and CRPC. Consistent with the
strategy we are following for custirsen, we intend to conduct parallel clinical trials to
evaluate OGX-427 in several cancer indications and treatment combinations to accelerate
assessment of this product candidate for further development.
 
    
    Developing and commercializing new cancer therapies to inhibit treatment resistance in
cancer patients. We plan to leverage our expertise in development to bring new products to
market as fast as possible. We intend to maintain and develop our relationship with the
Vancouver Prostate Centre, and develop relationships with other research institutions in
order to identify additional product candidates.
 
    
    Optimizing the development of our product candidates through use of outsourcing and
internal expertise. In order to increase efficiency and lower our overhead, we outsource,
and plan to continue to outsource, pre-clinical and manufacturing activities. We have
chosen to establish critical product development functions in-house, including clinical
trial management and regulatory affairs.
  15




---



##### Table of Contents



License and Collaboration Agreements
 Teva Pharmaceutical Industries Ltd.
 Custirsen
    
    
    The phase 3 SATURN trial to evaluate a durable pain palliation benefit for custirsen in
combination with docetaxel retreatment as second-line chemotherapy in approximately 300
patients with CRPC, which was initiated in the second quarter of 2010.
 
    
    The phase 3 SYNERGY trial to be conducted in approximately 125 cancer centers to
evaluate a survival benefit for custirsen in combination with first-line docetaxel
treatment in approximately 800 patients with CRPC, which was initiated in the third quarter
of 2010.
 
    
    A phase 3 clinical trial to evaluate a survival benefit for custirsen in combination
with first-line chemotherapy in patients with NSCLC, which is expected to be initiated in
2011 following successful manufacturing of additional custirsen drug product and completion
of DDI studies. The trial is expected to enroll approximately 950 patients. The study
protocol will include two futility assessments and one interim analysis for efficacy. The
first-line chemotherapy regimen has been selected as carboplatin and paclitaxel.
  
    
    We will be required to contribute $30 million towards the development of custirsen,
which will include our personnel costs for certain development activities.
 
    
    Teva will be required to fund all other expenses.
    16




---



##### Table of Contents



Isis Pharmaceuticals, Inc.
 Custirsen
      17




---



##### Table of Contents



OGX-427
      18




---



##### Table of Contents



University of British Columbia
 Custirsen
   OGX-427
  19




---



##### Table of Contents



OGX-225 and CSP-9222
   Summary of Milestone Obligations by Product Candidate
  Milestone Obligations to Third Parties
    
    Amount PayableCustirsen
    
    31% of non-royalty revenueOGX-427
    
    Up to $5,005,000 (1)(2)(3)OGX-225(3)
    
    Up to $4,347,000 (2)(3)CSP-9222
    
    Up to $14,000,000 (4)
 (1)
    
    Additional milestone payments may be required in respect of OGX-427 for product approvals
outside the field of oncology.(2)
    
    Payable in connection with initiating certain clinical trials and obtaining certain market
approvals.(3)
    
    Certain milestone payments are payable in Canadian dollars, which are translated based on the
December 31, 2010 exchange rate of US$1.00 = CAD$0.9946, and rounded to the nearest $1,000.(4)
    
    Payable in connection with initiating certain clinical trials, making certain regulatory
filings and obtaining certain market approvals. Government Regulations
 Drug Approval Process
   20




---



##### Table of Contents




    
    pre-clinical studies, including laboratory evaluation and animal studies to test for
initial safety and efficacy;
    
    submission to national health authorities of an IND or Clinical Trials Application, or
CTA, or equivalent dossier, which must be accepted by each national health authority before
human clinical trials may commence in that country;
    
    adequate and well-controlled clinical trials to establish the safety and efficacy of the
drug in its intended population and use(s);
    
    submission to appropriate national and/or regional regulatory health authorities of a
New Drug Application or NDA, or equivalent marketing authorization application, which
application is not automatically accepted for review; and
    
    approval by appropriate regulatory health authorities of the marketing authorization
application prior to any commercial sale or shipment of the drug in each country or
jurisdiction.
        21




---



##### Table of Contents



Contract Research Agreements
   Research and Development Expenditures
  Manufacturing
   Intellectual Property
  Patents
    22




---



##### Table of Contents



Trademarks
 ®
    23




---



##### Table of Contents



Competition
   
    
    establish that our product candidates are well tolerated and result in a clinical
benefit when administered to cancer patients;
    
    establish that our product candidates address significant unmet needs for patients
resulting in prioritization of our product candidates over other treatment options;
    
    advance the development of our lead programs, including the enrollment of patients for
our clinical trials;
    
    gain regulatory approval for our product candidates in their respective first
indications as well as expand into additional indications;
    
    commercialize our lead product candidates successfully, including convincing physicians,
insurers and other third-party payors of the advantages of our products, when and if it has
any, over current therapies;
    
    obtain intellectual property protection and protect the exclusivity for our product
candidates and products, when and if we have any; and
    
    acquire other product candidates to expand our pipeline.
 Employees
   24




---



##### Table of Contents



Company Information
   Available Information
   25




---



##### Table of Contents



ITEM 1A.
    
    RISK FACTORS
 Risks Related to Our Business
 Investing in our common stock involves a high degree of risk. You should consider carefully the
risks and uncertainties described below, together with all of the other information contained in
this Annual Report on Form 10-K, before deciding to invest in our common stock. If any of the
following risks materialize, our business, financial condition, results of operation and future
prospects will likely be materially and adversely affected. In that event, the market price of our
common stock could decline and you could lose all or part of your investment.
 Risks Related to Our Business
 We have a limited operating history, have incurred losses since inception and anticipate that we
will continue to incur losses for the foreseeable future. We have never had any products available
for commercial sale and we may never achieve or sustain profitability.
  We are highly dependent on the success of our lead product candidate, custirsen, and we cannot give
any assurance that custirsen, or any of our other product candidates, will receive regulatory
approval or will be successfully commercialized.
   26




---



##### Table of Contents



We depend on our collaborative relationship with Teva to further develop and commercialize
custirsen, and if our relationship is not successful or is terminated, we may not be able to
effectively develop and/or commercialize custirsen, which would have a material adverse effect on
our business.
  
    
    adverse decisions by Teva or the Joint Steering Committee regarding the development and
commercialization of custirsen;
    
    possible disagreements as to the timing, nature and extent of our development plans,
including clinical trials or regulatory approval strategy;
    
    loss of significant rights if we fail to meet our obligations under the Collaboration
Agreement;
    
    our limited control over clinical trials of custirsen;
    
    changes in key management personnel at Teva that are members of the Joint Steering
Committee; and
    
    possible disagreements with Teva regarding the Collaboration Agreement or ownership of
proprietary rights.
   Clinical trials may not demonstrate a clinical benefit of our product candidates.
    27




---



##### Table of Contents



Our clinical trials may be suspended or terminated at any time, including by the FDA, other
regulatory authorities, the IRB overseeing the clinical trial at issue, by a clinical trial site or
investigator, by Teva in the case of custirsen, or by us. Any failure or significant delay in
completing clinical trials for our product candidates could materially harm our financial results
and the commercial prospects for our product candidates.
  
    
    limited number of, and competition for, suitable patients with the particular types of
cancer required for enrollment in our clinical trials;
    
    limited number of, and competition for, suitable sites to conduct clinical trials;
    
    decrease in Tevas level of focus and efforts to develop custirsen;
    
    introduction of new product candidates to the market in therapeutic areas similar to
those that we are developing our product candidates;
    
    concurrent evaluation of new investigational product candidates in therapeutic areas
similar to those that we are developing our product candidates;
    
    delay or failure to obtain the FDAs or non-U.S. regulatory agencies approval or
agreement to commence a clinical trial, including our phase 3 or registration clinical
trials or amendment of those trials under an SPA;
    
    delay or failure to obtain required future additional funding, when needed, through
private or public offerings of our equity securities, debt financings, or the execution of
a licensing, partnership or collaboration agreement with a third party for any of our
product candidates;
    
    delay or failure to obtain sufficient manufacturing supply of custirsen;
    
    delay or failure to obtain sufficient supplies of the product candidate for our clinical
trials;
    
    delay or failure to reach agreement on acceptable clinical trial agreement terms or
clinical trial protocols with prospective sites or investigators; and
    
    delay or failure to obtain the approval of the IRB to conduct a clinical trial at a
prospective site.
  
    
    slower than expected rates of patient recruitment and enrollment;
    
    failure of patients to complete the clinical trial;
    
    unforeseen safety issues;
    
    lack of efficacy evidenced during clinical trials;
    
    termination of our clinical trials by one or more clinical trial sites or investigators;
    
    inability or unwillingness of patients or medical investigators to follow clinical trial
protocols;
    
    inability to monitor patients adequately during or after treatment;
    
    introduction of competitive products that may impede our ability to retain patients in
clinical trials;
    
    delay or failure to obtain sufficient manufacturing supply of custirsen; and
    
    delay or failure to obtain future additional funding through private or public offerings
of our equity securities, debt financings, or the execution of a licensing, partnership or
collaboration agreement with a third party for any of our product candidates in the event
of material unforeseen costs relating to our clinical trials currently in progress.
   28




---



##### Table of Contents



We rely, in part, on third parties to conduct clinical trials for our product candidates and plan
to rely on third parties to conduct future clinical trials. If these third parties do not
successfully carry out their contractual duties or meet expected deadlines, we may be unable to
obtain regulatory approval for or commercialize our current and future product candidates.
  We rely on third parties to manufacture and supply our product candidates.
      29




---



##### Table of Contents



If our competitors develop and market products that are more effective, safer or less expensive
than our future product candidates, our clinical trials and commercial opportunities will be
negatively affected.
  If new therapies become broadly used, we may need to conduct clinical trials of our product
candidates in combination with these new therapies to demonstrate safety and efficacy of the
combination. Additional trials will delay the development of our product candidates and increase
our costs. The failure of certain of our product candidates to work in combination with these new
therapies would have an adverse effect on our business.
    30




---



##### Table of Contents



Our product candidates may cause undesirable and potentially serious side effects during clinical
trials that could delay or prevent their regulatory approval or commercialization.
      
    
    Teva may elect to terminate the ongoing clinical trials and cease development of
custirsen;
    
    regulatory authorities may withdraw their approval of the product;
    
    we may be required to recall the product, change the way the product is administered,
conduct additional clinical trials or change the labeling of the product;
    
    a product may become less competitive and product sales may decrease; and
    
    our reputation may suffer.
   31




---



##### Table of Contents



Because we depend on financing from third parties for our operations, our business may fail if such
financing becomes unavailable or is not available on commercially reasonable terms.
  
    
    maintaining our partnership with Teva and Tevas ongoing commitment to develop custirsen
in a timely manner;
    
    whether we experience delays in our pre-clinical and clinical development programs, or
slower-than-anticipated product development;
    
    the scope and results of our pre-clinical studies and clinical trials;
    
    whether opportunities to acquire additional product candidates arise and the costs of
acquiring and developing those product candidates;
    
    whether we are able to enter into additional third-party collaborative partnerships to
develop and/or commercialize any of our other product candidates on terms that are
acceptable to us;
    
    the timing and requirements of, and the costs involved in, conducting studies required
to obtain regulatory approvals for our product candidates from the FDA and comparable
foreign regulatory agencies;
    
    the availability of third parties to perform the key development tasks for our product
candidates, including conducting pre-clinical studies and clinical trials and manufacturing
our product candidates to be tested in those studies and trials and the associated costs of
those services; and
    
    the costs involved in preparing, filing, prosecuting, maintaining, defending the
validity of and enforcing patent claims and other costs related to patent rights and other
intellectual property rights, including litigation costs and the results of such
litigation.
  Even if we or Teva receive regulatory approval to market our product candidates, the market may not
be receptive to our products.
  
    
    timing of market introduction of competitive products;
    
    safety and efficacy of our products;
    
    prevalence and severity of any side effects;
    
    potential advantages or disadvantages over alternative treatments;
    
    strength of marketing and distribution support;
    
    price of our products, both in absolute terms and relative to alternative treatments;
and
    
    availability of coverage and reimbursement from government and other third-party payors.
   32




---



##### Table of Contents



Although we have entered into a Collaboration Agreement with Teva for custirsen, we have not yet
partnered with third-party collaborators with respect to any of our other product candidates, and
we cannot control whether we will be able to do so on favorable terms, if at all.
  If we were to be successfully sued related to our products or operations, we could face substantial
liabilities that may exceed our resources.
  If we fail to acquire and develop products or product candidates at all or on commercially
reasonable terms, we may be unable to grow our business.
    33




---



##### Table of Contents



We will need to retain additional personnel and expand our other resources in order to promote
custirsen in the event we exercise our co-promotion option and develop our other product
candidates. If we fail to effectively expand our operations, including attracting and retaining key
management and scientific personnel, we may be unable to successfully develop or commercialize our
product candidates and our business may be materially adversely affected.
    We may encounter difficulties in managing our expected growth and in expanding our operations
successfully.
    34




---



##### Table of Contents



We may be adversely affected if our controls over external financial reporting fail or are
circumvented.
  Risks Related to Our Intellectual Property
 Our proprietary rights may not adequately protect our technologies and product candidates.
   
    
    we or our licensors were the first to make the inventions covered by each of our issued
patents and pending patent applications;
    
    we or our licensors were the first to file patent applications for these inventions;
    
    others will not independently develop similar or alternative technologies or duplicate
any of our technologies;
    
    any of our or our licensors pending patent applications will result in issued patents;
    
    any of our or our licensors patents will be valid or enforceable;
    
    any patents issued to us or our licensors and collaboration partners will provide us
with any competitive advantages, or will not be challenged by third parties; and
    
    we will develop additional proprietary technologies that are patentable, or the patents
of others will not have an adverse effect on our business.
  35




---



##### Table of Contents



We and our collaborators, including Teva, may not be able to protect our intellectual property
rights throughout the world.
   The intellectual property protection for our product candidates depends on third parties.
   36




---



##### Table of Contents



We may become involved in disputes with Teva or potential future collaborators over intellectual
property ownership, and publications by our research collaborators and scientific advisors could
impair our ability to obtain patent protection or protect our proprietary information, which, in
either case, could have a significant effect on our business.
  The patent protection for our product candidates or products may expire before we are able to
maximize their commercial value, which may subject us to increased competition and reduce or
eliminate our opportunity to generate product revenue.
   We may incur substantial costs as a result of litigation or other proceedings relating to patent
and other intellectual property rights and we may be unable to protect our rights to, or use of,
our technology.
   37




---



##### Table of Contents




    
    patent infringement and other intellectual property claims, which would be costly and
time consuming to defend, whether or not the claims have merit, and which could delay the
regulatory approval process and divert managements attention from our business;
    
    substantial damages for past infringement, which we may have to pay if a court
determines that our product candidates or technologies infringe a competitors patent or
other proprietary rights;
    
    a court prohibiting us from selling or licensing our technologies or future drugs unless
the third party licenses its patents or other proprietary rights to us on commercially
reasonable terms, which it is not required to do; and
    
    if a license is available from a third party, we may have to pay substantial royalties
or lump-sum payments or grant cross licenses to our patents or other proprietary rights to
obtain that license.
      38




---



##### Table of Contents



If we breach any of the agreements under which we license rights to our product candidates or
technology from third parties, we could lose license rights that are important to our business.
Certain of our license agreements may not provide an adequate remedy for a breach by the licensor.
   We may be subject to damages resulting from claims that we, or our employees or consultants, have
wrongfully used or disclosed alleged trade secrets of third parties.
  Risks Related to our Common Stock and Other Securities
 If we raise additional financing, the terms of such transactions may cause dilution to existing
stockholders or contain terms that are not favorable to us.
   39




---



##### Table of Contents



The price for our common stock is volatile.
   We are at risk of securities class action litigation.
  Anti-takeover provisions in our stockholder rights plan, our charter documents and under Delaware
law could make a third-party acquisition of us difficult.
  Risks Related to Our Industry
 The regulatory approval process is expensive, time consuming and uncertain and may prevent us from
obtaining approvals for the commercialization of some or all of our product candidates.
  
    
    restrictions on the products, manufacturers or manufacturing process;
    
    warning letters;
  40




---



##### Table of Contents




    
    civil and criminal penalties;
    
    injunctions;
    
    suspension or withdrawal of regulatory approvals;
    
    product seizures, detentions or import bans;
    
    voluntary or mandatory product recalls and publicity requirements;
    
    total or partial suspension of production;
    
    imposition of restrictions on operations, including costly new manufacturing
requirements; and
    
    refusal to approve pending NDAs or supplements to approved NDAs.
  
    
    a drug candidate may not be deemed safe or effective;
    
    the FDA may not find the data from pre-clinical studies and clinical trials sufficient;
    
    the FDA might not approve our third-party manufacturers processes or facilities;
    
    the FDA may change its approval policies or adopt new regulations; and
    
    third-party products may enter the market and change approval requirements.
 Even if we obtain regulatory approvals for our product candidates, the terms of approvals and
ongoing regulation of our product candidates may limit how we manufacture and market our product
candidates, which could materially affect our ability to generate revenue.
  
    
    restrictions on the products, manufacturers or manufacturing process;
    
    warning letters;
    
    civil or criminal penalties or fines;
    
    injunctions;
    
    product seizures, detentions or import bans;
    
    voluntary or mandatory product recalls and publicity requirements;
    
    suspension or withdrawal of regulatory approvals;
    
    total or partial suspension of production;
    
    imposition of restrictions on operations, including costly new manufacturing
requirements; and
    
    refusal to approve pending NDAs or supplements to approved NDAs.
  41




---



##### Table of Contents



There is a high risk that our drug development activities will not result in commercial products.
  If government and third-party payors fail to provide coverage and adequate reimbursement rates for
our product candidates, our revenue and potential for profitability will be reduced.
     42




---



##### Table of Contents



Failure to obtain regulatory approval outside the United States would prevent us or Teva from
marketing our product candidates abroad.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
    
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    REMOVED AND RESERVED
  43




---



##### Table of Contents



PART II
 
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF EQUITY SECURITIES
   OncoGenex Pharmaceuticals, Inc.
    
    HIGH
    
    
    LOWYEAR ENDED DECEMBER 31, 2009:First quarter
    
    $
    5.94
    
    
    $
    2.90Second quarter
    
    
    27.05
    
    
    
    3.90Third quarter
    
    
    42.99
    
    
    
    19.30Fourth quarter
    
    
    37.88
    
    
    
    20.10YEAR ENDED DECEMBER 31, 2010:First quarter
    
    $
    22.71
    
    
    $
    13.90Second quarter
    
    
    22.65
    
    
    
    13.39Third quarter
    
    
    15.60
    
    
    
    11.83Fourth quarter
    
    
    20.00
    
    
    
    13.59
   44




---



##### Table of Contents



Stock Performance Graph
  The stock price performance included in this graph is not necessarily indicative of future
stock price performance.
 
 12/31/05
    
    
    12/31/06
    
    
    12/31/07
    
    
    8/20/08(1)
    
    
    12/31/08
    
    
    12/31/09
    
    
    12/31/10OncoGenex Pharmaceuticals, Inc.
    
    $
    100
    
    
    $
    121.47
    
    
    $
    8.65
    
    
    $
    5.56
    
    
    $
    3.31
    
    
    $
    24.61
    
    
    $
    18.54NASDAQ Composite
    
    
    100
    
    
    
    111.74
    
    
    
    124.67
    
    
    
    109.43
    
    
    
    73.77
    
    
    
    107.12
    
    
    
    125.93NASDAQ Pharmaceutical
    
    
    100
    
    
    
    101.61
    
    
    
    94.58
    
    
    
    103.13
    
    
    
    87.4
    
    
    
    95.29
    
    
    
    101.44
 (1)
    
    August 20, 2008 represents the day before the date of the completion of the
Arrangement.  45




---



##### Table of Contents



ITEM 6.
    
    SELECTED CONSOLIDATED FINANCIAL DATA
   December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(in thousands except share and per share amounts)Statements of Loss Data:Collaboration revenue
    
    $
    13,616
    
    
    
    25,539
    
    
    
    
    
    
    
    
    
    
    
    Total expenses
    
    $
    28,361
    
    
    $
    28,121
    
    
    $
    11,112
    
    
    $
    7,675
    
    
    $
    11,302Net loss
    
    $
    12,584
    
    
    $
    5,476
    
    
    $
    4,204
    
    
    $
    8,536
    
    
    $
    11,594Redeemable convertible preferred share
accretion
    
    $
    
    
    
    $
    
    
    
    $
    1,973
    
    
    $
    2,944
    
    
    $
    2,604Loss attributable to common stockholders
    
    $
    12,584
    
    
    $
    5,476
    
    
    $
    6,177
    
    
    $
    11,480
    
    
    $
    14,198Basic and diluted loss per common share
    
    $
    (1.79
    )
    
    $
    (0.95
    )
    
    $
    (3.38
    )
    
    $
    (96.63
    )
    
    $
    (119.51
    )Shares used in calculation of net loss per shareBasic
    
    
    7,030,903
    
    
    
    5,766,850
    
    
    
    1,829,276
    
    
    
    118,801
    
    
    
    118,801Diluted
    
    
    7,030,903
    
    
    
    5,766,850
    
    
    
    1,829,276
    
    
    
    118,801
    
    
    
    118,801
 December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(in thousands)Balance Sheet Data:Cash, cash equivalents
and short-term
investments
    
    $
    85,107
    
    
    $
    64,568
    
    
    $
    12,419
    
    
    $
    5,131
    
    
    $
    8,012Total assets
    
    $
    89,918
    
    
    $
    68,980
    
    
    $
    14,790
    
    
    $
    7,350
    
    
    $
    9,395Current liabilities
    
    $
    27,476
    
    
    $
    25,781
    
    
    $
    2,884
    
    
    $
    5,713
    
    
    $
    2,532Series preferred shares
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    37,373
    
    
    $
    34,429Additional paid-in capital and common shares
    
    $
    107,589
    
    
    $
    73,804
    
    
    $
    56,076
    
    
    $
    399
    
    
    $
    399Accumulated deficit
    
    $
    (66,069
    )
    
    $
    (53,485
    )
    
    $
    (48,009
    )
    
    $
    (41,832
    )
    
    $
    (30,352
    )Stockholders equity
    
    $
    44,125
    
    
    $
    22,959
    
    
    $
    10,707
    
    
    $
    (38,223
    )
    
    $
    (27,566
    )
  46




---



##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Forward-Looking Statements
  
    
    progress and preliminary and future results of clinical trial conducted by us or our
collaborators;
 
    
    anticipated regulatory filings, requirements and future clinical trials conducted by us
or our collaborators;
 
    
    our anticipated future capital requirements and the terms of any capital financing
agreements;
 
    
    timing and amount of future contractual payments, product revenue and operating
expenses;
 
    
    market acceptance of our products and the estimated potential size of these markets; and
 
    
    our anticipated future capital requirements and the terms of any capital financing
agreements.
  
    
    uncertainty relating to the timing, feasibility and results of clinical trials;
 
    
    dependence on Tevas ongoing commitment and ability to develop and commercialize
custirsen;
 
    
    dependence on the development and commercialization of our product candidates,
particularly on custirsen;
 
    
    the risk that research or previous clinical trial results may not be indicative of
results in humans or in future studies;
 
    
    uncertainties regarding the safety and effectiveness of our products and technologies;
 
    
    the timing, expense and uncertainty associated with the development and regulatory
approval process for products;
 
    
    uncertainties regarding our future operating results, and the risk that our product
candidates will not obtain the requisite regulatory approvals to commercialize or that the
future sales of our product candidates may be less than expected or nil;
 
    
    future capital requirements and uncertainty of obtaining additional funding through debt
or equity financings on terms acceptable to us;
 
    
    acceptance of our products by the medical community;
 
    
    the uncertainty associated with exiting or subleasing our excess office and laboratory
space;
 
    
    our ability to build out our product candidate pipeline through product in-licensing,
acquisition activities, or otherwise;
 
    
    changes in the treatment landscape, general competitive conditions within the drug
development and pharmaceutical industry and new developments or therapies that may not work
in combination with our product candidates;
 
    
    the potential for product liability issues and related litigation;
 
    
    our dependence on key employees;
 
    
    proper management of our operations;
  47




---



##### Table of Contents




    
    the potential inability to successfully protect and enforce our intellectual property
rights;
 
    
    the reliance on third parties who license intellectual property rights to us to comply
with the terms of such agreements and to enforce, prosecute and defend such intellectual
property rights;
 
    
    the reliance on third parties to manufacture and supply our product candidates;
 
    
    the effect of current, pending or future legislation, regulations and legal actions in
the United States, Canada and elsewhere affecting the pharmaceutical and healthcare
industries;
 
    
    volatility in the value of our common stock; and
 
    
    general economic conditions.
   Overview
  
    
    an overview of our business;
 
    
    results of operations and why those results are different from the prior year; and
 
    
    capital resources we currently have and possible sources of additional funding for
future capital requirements.
 Arrangement Agreement
  Overview of the Company and 2010 Developments
    48




---



##### Table of Contents



Product Candidate Custirsen
   
    
    The phase 3 SATURN trial to evaluate a durable pain palliation benefit for custirsen in
combination with docetaxel retreatment as second-line chemotherapy in approximately 300
patients with CRPC, which was initiated in the second quarter of 2010.
 
    
    The phase 3 SYNERGY trial to be conducted in approximately 125 cancer centers to
evaluate a survival benefit for custirsen in combination with first-line docetaxel
treatment in approximately 800 patients with CRPC, which was initiated in the third quarter
of 2010.
 
    
    A phase 3 clinical trial to evaluate a survival benefit for custirsen in combination
with first-line chemotherapy in patients with NSCLC, which is expected to be initiated in
2011 following successful manufacturing of additional custirsen drug product and completion
of DDI studies. The trial is expected to enroll approximately 950 patients. The study
protocol will include two futility assessments and one interim analysis for efficacy. The
first-line chemotherapy regimen has been selected as carboplatin and paclitaxel.
     49




---



##### Table of Contents




    
    A randomized phase 2 trial evaluating the benefit of combining custirsen with first-line
docetaxel, the final results of which were published in the September 20, 2010 issue of the
Journal of Clinical Oncology. Analyses indicating a survival benefit in patients treated
with custirsen in combination with first-line docetaxel compared to docetaxel alone, the
latter being the current standard of care for patients with advanced, progressive
metastatic prostate cancer requiring initial chemotherapy, are described in our 2009 Annual
Report on Form 10-K filed on March 8, 2010 under the heading BusinessOur Product
CandidatesCustirsenSummary of Final Results of Custirsen Phase 2 Clinical Trial in
Patients With CRPC Receiving Custirsen and Docetaxel as First-Line Chemotherapy. Due to
the results of the phase 2
trial, the SYNERGY trial, which was initiated in third quarter of 2010, will evaluate the
survival benefit of custirsen in patients treated with first-line chemotherapy.
 
    
    Durable pain palliation, defined as pain palliation of 12 weeks or greater, which has
been observed in another phase 2 trial evaluating patients with metastatic CRPC who
progressed while receiving, or within six months of completing, first-line docetaxel
treatment. Of the patients on this trial who had pain or were on opioids for pain control
and were retreated with docetaxel as second-line treatment in combination with custirsen,
approximately 50% had durable pain palliation. This is favorable even when compared to the
35% pain responses of three weeks or greater observed in the phase 3 trial, which supported
the registration of docetaxel as first-line chemotherapy in patients with CRPC, and when
compared to the pain responses for cabazitaxel of 9.2% and for mitoxantrone of 7.7%
observed in the Phase 3 TROPIC trial. Due to the results of our phase 2 trial, the SATURN
trial, which was initiated in the second quarter of 2010, is evaluating the durable pain
palliation benefit of custirsen in patients treated with second-line docetaxel. The SATURN
trial will enroll patients in approximately 50 cancer centers who have previously responded
to first-line docetaxel therapy, but who subsequently experienced disease progression
involving prostate cancer-related pain despite opioid usage.
 
    
    A phase 2 trial evaluating 81 patients with advanced NSCLC who received custirsen in
combination with gemcitabine and a platinum chemotherapy (cisplatin or carboplatin) as
first-line chemotherapy. The median overall survival was 14.1 months and 54% of patients
survived at least one year. Thirty percent of patients who received custirsen with
first-line chemotherapy survived at least two years. For comparison, published studies using
a platinum-based regimen plus gemcitabine as first-line chemotherapy for advanced NSCLC
reported median survivals of 8 to 11 months and one-year survival rates of 33% to 43%.
Market approval for Avastin plus paclitaxel and carboplatin chemotherapy for NSCLC was based
on results showing a median survival of 12.3 months compared to 10.3 months for patients
treated with chemotherapy alone. Survival rates for Avastin plus chemotherapy versus
chemotherapy alone were reported as 51% versus 44% at one year and 23% versus 15% at two
years, respectively. The protocol for the custirsen phase 3 registration trial in advanced,
unresectable NSCLC has yet to be finalized. Teva is expected to initiate this trial in 2011,
which will assess overall survival as the primary endpoint.
 Product Candidate OGX-427
     50




---



##### Table of Contents



Product Candidates OGX-225, SN2310 and CSP-9222
   51




---



##### Table of Contents



Collaboration Revenue
  Research and Development Expenses
       52




---



##### Table of Contents



General and Administrative Expenses
  Restructuring Activities
    Results of Operations
   53




---



##### Table of Contents



Years Ended December 31, 2010 and December 31, 2009
          54




---



##### Table of Contents



Years Ended December 31, 2009 and December 31, 2008
       Liquidity and Capital Resources
     55




---



##### Table of Contents



Cash Flows
 Cash Used in Operations
   Cash Provided by Financing Activities
   Cash Used/Provided by Investing Activities
   Operating Capital and Capital Expenditure Requirements
  
    
    completing the SATURN trial, a phase 3 clinical trial that is evaluating a durable pain
palliation benefit for custirsen in combination with docetaxel as second-line chemotherapy
in approximately 300 patients with CRPC, which was initiated in the second quarter of 2010;
 
    
    completing the SYNERGY trial, a phase 3 clinical trial that is evaluating a survival
benefit for custirsen in combination with docetaxel as first-line chemotherapy in
approximately 800 patients with CRPC, which was initiated in the third quarter of 2010;
 
    
    completing patient accrual in a phase 3 clinical trial that is evaluating a survival
benefit for custirsen in patients with advanced, unresectable NSCLC, which is expected to
be initiated in 2011;
 
    
    completing an investigator-sponsored phase 2 clinical trial evaluating OGX-427 treatment
in patients with prostate cancer; and
    
    completing a phase 2 clinical trial evaluating OGX-427 in combination with standard
first-line chemotherapy in approximately 180 patients with metastatic bladder cancer.
  56




---



##### Table of Contents




    
    timing, costs and results of clinical trials, preclinical development and regulatory
approvals;
 
    
    success of custirsen and achieving milestones and royalties;
 
    
    maintaining our relationship with Teva and Tevas ongoing level of focus and efforts to
develop custirsen;
 
    
    timing, costs and results of drug discovery and R&D;
 
    
    entering into new collaborative or product license agreements for products in our
pipeline;
 
    
    our ability to obtain additional funding through a partnership or collaboration
agreement with a third party or licenses of certain of our product candidates, or through
private or public offerings of our equity or debt; and
 
    
    costs related to obtaining, defending and enforcing patents.
 Contractual Obligations
  Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Contractual Obligations
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsBothell office operating lease (1)
    
    $
    15,747,000
    
    
    $
    2,055,000
    
    
    $
    4,297,000
    
    
    $
    4,559,000
    
    
    $
    4,836,000Vancouver office operating lease (2)
    
    
    424,000
    
    
    
    128,000
    
    
    
    215,000
    
    
    
    81,000
    
    
    
    Bayer license maintenance fees (3)
    
    
    1,125,000
    
    
    
    175,000
    
    
    
    425,000
    
    
    
    525,000
    
    
    
    UBC license maintenance fees (4)
    
    
    40,000
    
    
    
    8,000
    
    
    
    16,000
    
    
    
    16,000
    
    
    
    Leased equipment
    
    
    26,000
    
    
    
    16,000
    
    
    
    10,000
    
    
    
    
    
    
    
    Total
    
    $
    17,362,000
    
    
    $
    2,382,000
    
    
    $
    4,963,000
    
    
    $
    5,181,000
    
    
    $
    4,836,000
 (1)
    
    This operating lease, which commenced in 2007, is for a 10-year term and includes two
five-year option renewals.(2)
    
    This operating lease expires in 2014.(3)
    
    Under the terms of our agreement with Bayer, we make annual payments to Bayer on June 27 of
each year, with an initial payment of $100,000 in 2008. The payments will increase annually by
$25,000 until the initiation of the first phase 3 clinical trial relating to CSP-9222, at which
point the payments reset to $100,000 and increase by $25,000, until such time as we achieve either
the first NDA filing in the United States or the European Union related to CSP-9222. For the
purposes of this table, we assume no reset in pricing resulting from initiation of phase 3 trials.
We have the option to terminate this agreement upon 60 days advance written notice to Bayer.(4)
    
    We are obligated to pay an annual license maintenance fee of CAD$8,000 to UBC, which has been
translated based on the December 31, 2010 exchange rate of US$1.00 = CAD$0.9946, and rounded to the
nearest $1,000.  57




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Inflation
  Contingencies and Commitments
 Teva Pharmaceutical Industries Ltd.
    Isis Pharmaceuticals Inc. and University of British Columbia
      58




---



##### Table of Contents



Bayer HealthCare LLC
   Lease Arrangements
   CAD2011
    
    $
    1282012
    
    
    1072013
    
    
    1072014
    
    
    80Total
    
    $
    422
  59




---



##### Table of Contents



2011
    
    $
    2,0552012
    
    
    2,1172013
    
    
    2,1802014
    
    
    2,2462015
    
    
    2,313Remainder
    
    
    4,837Total
    
    $
    15,748
  Guarantees and Indemnifications
    Material Changes in Financial Condition
 (in thousands)
    
    December 31, 2010
    
    
    December 31, 2009Total Assets
    
    $
    89,918
    
    
    $
    68,980Total Liabilities
    
    $
    45,793
    
    
    $
    46,021Total Equity
    
    $
    44,125
    
    
    $
    22,959
   60




---



##### Table of Contents



Critical Accounting Policies and Estimates
 Use of Estimates
  Cash Equivalents
  Short-Term Investments
  Fair value of financial instruments
  Intellectual Property
  Revenue Recognition
   61




---



##### Table of Contents



Multiple-Element Arrangements,
    Revenue Recognition
  62




---



##### Table of Contents



Property and Equipment
  Computer equipment
    
    3 yearsFurniture and fixtures
    
    5 yearsLeasehold improvements
    
    Over the term of the lease
 Reporting Currency and Foreign Currency Translation
  Foreign Currency Matters,
 Income Taxes
  Scientific Research and Development Tax Credits
  Therapeutic Discovery Research Grants
   63




---



##### Table of Contents



R&D Expenses
 Research and Development,
  Stock-Based Compensation
 Stock
Compensation,
 Segment Information
 Segment Reporting.
 Comprehensive Income (Loss)
  Loss per Common Share
  Warrants
   64




---



##### Table of Contents



Reclassifications
  Recently Adopted Accounting Policies
  Recent Accounting Pronouncements
   65




---



##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
  Foreign Currency Exchange Risk
   66




---



##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO FINANCIAL STATEMENTS:Report of Independent Registered Public Accounting Firm
    
    
    68Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    70Consolidated Statements of Loss for the years ended December 31, 2010, 2009, and 2008
    
    
    71Consolidated Statements of Shareholders Equity for the years ended December 31,
2010, 2009, and 2008
    
    
    72Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009,
and 2008
    
    
    73Notes to Consolidated Financial Statements
    
    
    74
  67




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 OncoGenex Pharmaceuticals, Inc.
 OncoGenex Pharmaceuticals, Inc.
  OncoGenex
Pharmaceuticals, Inc.
 OncoGenex Pharmaceuticals, Inc.s
 Vancouver, Canada,
    
    /s/ ERNST & YOUNG LLPMarch 10, 2011
    
    Chartered Accountants
  68




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 OncoGenex Pharmaceuticals, Inc.
 OncoGenex Pharmaceuticals, Inc.s
    OncoGenex Pharmaceuticals, Inc.
  Vancouver, Canada,
    
    /s/ ERNST & YOUNG LLPMarch 10, 2011
    
    Chartered Accountants
  69




---



##### Table of Contents



OncoGenex Pharmaceuticals, Inc.
 
 Consolidated Balance Sheets
 (In thousands of U.S. dollars)
 December 31,
    
    
    December 31,2010
    
    
    2009$
    
    
    $ASSETSCurrentCash and cash equivalents [note 6]
    
    
    23,533
    
    
    
    62,051Restricted cash [note 6]
    
    
    502
    
    
    
    Short-term investments [note 6]
    
    
    61,574
    
    
    
    2,517Amounts receivable
    
    
    1,224
    
    
    
    3,109Prepaid expenses
    
    
    2,485
    
    
    
    722Total current assets
    
    
    89,318
    
    
    
    68,399Property and equipment, net [note 7]
    
    
    87
    
    
    
    72Other assets [note 9]
    
    
    513
    
    
    
    509Total assets
    
    
    89,918
    
    
    
    68,980LIABILITIES AND SHAREHOLDERS EQUITYCurrentAccounts payable and accrued liabilities
    
    
    893
    
    
    
    14,453Deferred collaboration revenue [note 4]
    
    
    10,000
    
    
    
    10,000Current portion of long-term obligations [note 8]
    
    
    1,314
    
    
    
    1,328Warrant
liability [note 6, note 11]
    
    
    15,269
    
    
    
    Total current liabilities
    
    
    27,476
    
    
    
    25,781Deferred collaboration revenue, net of current [note 4]
    
    
    11,622
    
    
    
    16,528Long-term obligations, less current portion [note 8]
    
    
    6,695
    
    
    
    3,712Total liabilities
    
    
    45,793
    
    
    
    46,021Commitments and contingencies [note 13]Shareholders equity:Common shares [note 11]:$0.001 par
value 25,000,000 shares authorized and 9,693,591 issued and outstanding at December 31, 2010
    
    
    10
    
    
    
    6Additional paid-in capital
    
    
    107,579
    
    
    
    73,798Accumulated deficit
    
    
    (66,069
    )
    
    
    (53,485
    )Accumulated other comprehensive income
    
    
    2,605
    
    
    
    2,640Total shareholders equity
    
    
    44,125
    
    
    
    22,959Total liabilities and shareholders equity
    
    
    89,918
    
    
    
    68,980Subsequent events [note 16]
   70




---



##### Table of Contents



OncoGenex Pharmaceuticals, Inc.
 
 Consolidated Statements of Loss
 (In thousands of U.S. dollars, except share and per share amounts)
 Years EndedDecember 31,2010
    
    
    2009
    
    
    2008$
    
    
    $
    
    
    $COLLABORATION REVENUE
    
    
    13,616
    
    
    
    25,539
    
    
    
    EXPENSESResearch and development
    
    
    18,483
    
    
    
    20,209
    
    
    
    7,819General and administrative [note 12]
    
    
    5,840
    
    
    
    3,961
    
    
    
    3,293Restructuring expense [note 8]
    
    
    4,038
    
    
    
    3,951
    
    
    
    Total expenses
    
    
    28,361
    
    
    
    28,121
    
    
    
    11,112OTHER INCOME (EXPENSE)Interest income
    
    
    86
    
    
    
    47
    
    
    
    210Other
    
    
    6
    
    
    
    70
    
    
    
    211Warrant issuance costs
    
    
    (1,027
    )
    
    
    
    
    
    
    Gain (loss) on warrants
    
    
    96
    
    
    
    
    
    
    
    Total other income (expense)
    
    
    (839
    )
    
    
    117
    
    
    
    421Loss for the period before taxes and extraordinary gain
    
    
    (15,584
    )
    
    
    (2,465
    )
    
    
    (10,691
    )Income tax expense (recovery) [note 10]
    
    
    (3,000
    )
    
    
    3,011
    
    
    
    (2,059
    )Loss before extraordinary gain
    
    
    (12,584
    )
    
    
    (5,476
    )
    
    
    (8,632
    )Extraordinary gain [note 5]
    
    
    
    
    
    
    
    
    
    
    4,428Net loss
    
    
    (12,584
    )
    
    
    (5,476
    )
    
    
    (4,204
    )Redeemable convertible preferred share accretion
    
    
    
    
    
    
    
    
    
    
    1,973Loss attributable to common shareholders
    
    
    (12,584
    )
    
    
    (5,476
    )
    
    
    (6,177
    )Basic and diluted loss per common share
[note 11[h]]
    
    
    (1.79
    )
    
    
    (.95
    )
    
    
    (3.38
    )Weighted average number of common shares
[note 11[h]]
    
    
    7,030,903
    
    
    
    5,766,850
    
    
    
    1,829,276
   71




---



##### Table of Contents



OncoGenex Pharmaceuticals, Inc.
 
 Consolidated Statements of Shareholders Equity
 (In thousands of U.S. dollars, except share amounts)
 Accumulated
    
    
    
    
    
    
    
    
    
    
    TotalNumber of
    
    
    Additional
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    ShareholdersCommon
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Comprehensive
    
    
    Accumulated
    
    
    EquityShares
    
    
    Capital
    
    
    Income (Loss)
    
    
    Income (Loss)
    
    
    deficit
    
    
    (Deficiency)(in thousands of U.S. dollars, except share amounts)Balance, December 31, 2007
    
    
    118,801
    
    
    
    966
    
    
    
    2,643
    
    
    
    
    
    
    
    (41,832
    )
    
    
    (38,223
    )Stock-based compensation expense
    
    
    
    
    
    
    174
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    174Shares held by Sonus shareholders
    
    
    2,059,898
    
    
    
    10,456
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,456Shares issued in exchange for
convertible debentures
    
    
    1,036,586
    
    
    
    5,012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,012Shares issued in exchange for
preferred shares
    
    
    905,131
    
    
    
    39,345
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,345Escrow shares released on
achievement of milestones
    
    
    1,388,875Stock option exercises
    
    
    34,601
    
    
    
    122
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    122Issuance of common stock under
employee benefit plans
    
    
    222
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Cumulative translation adjustment
from application of US dollar
reporting
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )
    
    
    
    
    
    
    (3
    )Redeemable convertible preferred
share accretion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,973
    )
    
    
    (1,973
    )Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,204
    )
    
    
    (4,204
    )
    
    
    (4,204
    )Comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,207
    )Balance, December 31, 2008
    
    
    5,544,114
    
    
    
    56,076
    
    
    
    2,640
    
    
    
    
    
    
    
    (48,009
    )
    
    
    10,707Stock-based compensation expense
    
    
    
    
    
    
    380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    380Shares issued in July 2009 financing
    
    
    475,000
    
    
    
    9,304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,304Shares issued in Teva share
purchase agreement
    
    
    267,531
    
    
    
    7,903
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,903Stock option exercises
    
    
    37,388
    
    
    
    141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,476
    )
    
    
    (5,476
    )
    
    
    (5,476
    )Comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,476
    )Balance, December 31, 2009
    
    
    6,324,033
    
    
    
    73,804
    
    
    
    2,640
    
    
    
    
    
    
    
    (53,485
    )
    
    
    22,959Stock-based compensation expense
    
    
    
    
    
    
    642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    642Shares issued in October 2010
financing
    
    
    3,174,602
    
    
    
    32,319
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,319Unrealized loss on marketable
securities
    
    
    
    
    
    
    
    
    
    
    (35
    )
    
    
    (35
    )
    
    
    
    
    
    
    (35
    )Stock option exercises
    
    
    194,956
    
    
    
    824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    824Loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,584
    )
    
    
    (12,584
    )
    
    
    (12,584
    )Comprehensive loss for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,584
    )Balance, December 31, 2010
    
    
    9,693,591
    
    
    
    107,589
    
    
    
    2,605
    
    
    
    
    
    
    
    (66,069
    )
    
    
    44,125
  72




---



##### Table of Contents



OncoGenex Pharmaceuticals, Inc.
 
 Consolidated Statements of Cash Flows
 (In thousands of U.S. dollars)
 Years endedDecember 31,2010
    
    
    2009
    
    
    2008$
    
    
    $
    
    
    $OPERATING ACTIVITIESLoss for the period
    
    
    12,584
    
    
    
    5,476
    
    
    
    4,204Add items not involving cashExtraordinary loss
    
    
    
    
    
    
    
    
    
    
    (4,428
    )Warrant issuance costs
    
    
    1,027
    
    
    
    
    
    
    
    Change in value of warrants
    
    
    (96
    )
    
    
    
    
    
    
    Depreciation
    
    
    52
    
    
    
    50
    
    
    
    89Stock-based compensation [note 11[c]]
    
    
    642
    
    
    
    380
    
    
    
    174Accrued interest on convertible debenture [note 11]
    
    
    
    
    
    
    
    
    
    
    313Restructuring expense [note 8]
    
    
    4,038
    
    
    
    3,951
    
    
    
    Changes in non-cash working capital itemsAmounts receivable (payable)
    
    
    1,885
    
    
    
    (2,955
    )
    
    
    204Investment tax credit recoverable
    
    
    
    
    
    
    1,090
    
    
    
    646Restricted cash
    
    
    (502
    )
    
    
    
    
    
    
    Prepaid expenses
    
    
    (1,763
    )
    
    
    (136
    )
    
    
    Other assets
    
    
    (4
    )
    
    
    (12
    )
    
    
    (117
    )Accounts payable and accrued liabilities
    
    
    (13,560
    )
    
    
    12,200
    
    
    
    (2,244
    )Lease obligation [note 8]
    
    
    (1,069
    )
    
    
    (741
    )
    
    
    (253
    )Deferred collaboration revenue [note 4]
    
    
    (4,906
    )
    
    
    26,527
    
    
    
    Taxes payable on preferred shares
    
    
    
    
    
    
    
    
    
    
    (2,487
    )Cash provided by (used in) operating activities
    
    
    (26,840
    )
    
    
    34,878
    
    
    
    (12,307
    )FINANCING ACTIVITIESCash paid on fractional shares eliminated on reverse share split
    
    
    
    
    
    
    
    
    
    
    (3
    )Proceeds from issuance of common stock under stock option and
employee benefit plans
    
    
    824
    
    
    
    141
    
    
    
    124Issuance of warrants, net of warrant issuance costs
    
    
    14,338
    
    
    
    
    
    
    
    Issuance of common shares, net of share issue costs
    
    
    32,319
    
    
    
    17,206
    
    
    
    Cash provided by financing activities
    
    
    47,481
    
    
    
    17,347
    
    
    
    121INVESTING ACTIVITIESPurchase of investments
    
    
    (93,018
    )
    
    
    (4,036
    )
    
    
    (4,843
    )Proceeds from sale of investments
    
    
    33,960
    
    
    
    6,280
    
    
    
    15,276Purchase of property and equipment
    
    
    (68
    )
    
    
    (15
    )
    
    
    (3
    )Cash received on reverse takeover of Sonus
    
    
    
    
    
    
    
    
    
    
    5,464Transaction fees on reverse takeover of Sonus
    
    
    
    
    
    
    
    
    
    
    (807
    )Cash provided by (used in) investing activities
    
    
    (59,126
    )
    
    
    2,229
    
    
    
    15,087Effect of exchange rate changes on cash
    
    
    (33
    )
    
    
    (21
    )
    
    
    90Increase in cash and cash equivalents during the period
    
    
    (38,518
    )
    
    
    54,433
    
    
    
    2,992Cash and cash equivalents, beginning of the period
    
    
    62,051
    
    
    
    7,618
    
    
    
    4,626Cash and cash equivalents, end of the period
    
    
    23,533
    
    
    
    62,051
    
    
    
    7,618Supplemental cash flow informationProperty and equipment acquired under lease obligation
    
    
    
    
    
    
    65
    
    
    
    
   73




---



##### Table of Contents



OncoGenex Pharmaceuticals, Inc.
 
 Notes to Consolidated Financial Statements
 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
   Basis of Presentation
  Liquidity
  2. ACCOUNTING POLICIES
 Significant Accounting Policies
 Use of Estimates
  Cash Equivalents
  Short-Term Investments
   74




---



##### Table of Contents



Fair value of financial instruments
  Intellectual Property
  Revenue Recognition
   Multiple-Element Arrangements
   75




---



##### Table of Contents



Property and Equipment
  Computer equipment
    
    3 yearsFurniture and fixtures
    
    5 yearsLeasehold improvements
    
    Over the term of the lease
 Reporting Currency and Foreign Currency Translation
    76




---



##### Table of Contents



Income Taxes
  Scientific Research and Development Tax Credits
  Therapeutic Discovery Research Grants
  Research and Development Costs
   Stock-Based Compensation
   77




---



##### Table of Contents



Segment Information
  Comprehensive Income (Loss)
  Loss per Common Share
  Warrants
  Reclassifications
  Recently Adopted Accounting Policies
   78




---



##### Table of Contents



Recent Accounting Pronouncements
  3. FINANCIAL INSTRUMENTS AND RISK
    4. COLLABORATION AGREEMENT
     79




---



##### Table of Contents




    
    A phase 3 clinical trial, referred to as the SATURN trial, to evaluate a durable pain
palliation benefit for custirsen in combination with docetaxel retreatment as second-line
chemotherapy in approximately 300 patients with CRPC, which was initiated in the second
quarter of 2010.
 
    
    A phase 3 clinical trial, referred to as the SYNERGY trial, to be conducted in
approximately 125 cancer centers to evaluate a survival benefit for custirsen in
combination with first-line docetaxel treatment in approximately 800 patients with CRPC,
which was initiated in the third quarter of 2010.
 
    
    A phase 3 clinical trial to evaluate a survival benefit for custirsen in combination
with first-line chemotherapy in patients with NSCLC, which is expected to be initiated in
2011 which is expected to be initiated in 2011 following successful manufacturing of
additional custirsen drug product and completion of drug-drug interaction DDI studies. The
trial is expected to enroll approximately 950 patients. The study protocol will include two
futility assessments and one interim analysis for efficacy. The first-line chemotherapy
regimen has been selected as carboplatin and paclitaxel.
   
    
    the Company is required to spend $30 million in direct and indirect development costs,
and
 
    
    Teva will fund all other expenses under the Clinical Development Plan.
   80




---



##### Table of Contents



Amendment to Isis and UBC License Agreements
    81




---



##### Table of Contents



5. REVERSE TAKEOVER
      Sonus common stock
    
    $
    10,385Fair value of options and warrants assumed
    
    
    71Transaction costs of OncoGenex
    
    
    807Total purchase price
    
    $
    11,263
  Cash
    
    $
    5,464Marketable securities
    
    
    14,808Accounts receivable
    
    
    6Interest receivable
    
    
    273Other current assets
    
    
    175Furniture and equipment
    
    
    1,186Other long term assets
    
    
    497Intangible assets
    
    
    280Accounts payable
    
    
    (35
    )Accrued expenses excluding severance payable
    
    
    (652
    )Severance payable to employees as part of restructuring
    
    
    (1,322
    )Severance payable to senior executives
    
    
    (1,440
    )Excess facility loss
    
    
    (2,083
    )Negative goodwill
    
    
    (5,894
    )Total purchase price
    
    $
    11,263
  82




---



##### Table of Contents



Negative goodwill
    
    $
    (5,894
    )Furniture and equipment
    
    
    1,186Intangible assets
    
    
    280Excess negative goodwill
    
    $
    (4,428
    )
 Pro Forma Results of Operations
  For theyear ended(in thousands except shareholder and per share amounts)
    
    December 31, 2008Revenue
    
    
    Net loss applicable to common shareholders
    
    $
    (28,102
    )Net loss per share  basic and diluted
    
    $
    (15.36
    )Weighted average shares
    
    
    1,829,276
 6. FAIR VALUE MEASUREMENTS
   
    
    Level 1  Quoted prices in active markets for identical securities.
 
    
    Level 2  Other significant observable inputs that are observable through corroboration
with market data (including quoted prices in active markets for similar securities).
 
    
    Level 3  Significant unobservable inputs that reflect managements best estimate of
what market participants would use in pricing the asset or liability.
  83




---



##### Table of Contents



Financial Instruments
 Cash
  U.S. Government and Agency Securities
 U.S. Government Securities
 U.S. Agency Securities
 Corporate and Other Debt
 Corporate Bonds and Commercial Paper
  84




---



##### Table of Contents



(in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    2010AssetsCash
    
    $
    14,817
    
    
    $
    
    
    
    $
    
    
    
    $
    14,817Money market securities
    
    
    3,403
    
    
    
    
    
    
    
    
    
    
    
    3,403U.S. government securities
    
    
    2,700
    
    
    
    
    
    
    
    
    
    
    
    2,700U.S. agency securities
    
    
    1,407
    
    
    
    
    
    
    
    
    
    
    
    1,407Corporate bonds and commercial paper
    
    
    
    
    
    
    63,282
    
    
    
    
    
    
    
    63,282$
    22,327
    
    
    $
    63,282
    
    
    $
    
    
    
    $
    85,609LiabilitiesWarrants
    
    
    
    
    
    
    
    
    
    
    15,269
    
    
    
    15,269
 (in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    2009Cash and Marketable SecuritiesCash and cash equivalents, restated cash
    
    $
    47,590
    
    
    $
    
    
    
    $
    
    
    
    $
    47,590Money market securities
    
    
    5,941
    
    
    
    
    
    
    
    
    
    
    
    5,941U.S. government securities
    
    
    6,033
    
    
    
    
    
    
    
    
    
    
    
    6,033U.S. agency securities
    
    
    401
    
    
    
    1,103
    
    
    
    
    
    
    
    1,504Corporate bonds and commercial paper
    
    
    
    
    
    
    3,500
    
    
    
    
    
    
    
    3,500$
    59,965
    
    
    $
    4,603
    
    
    $
    
    
    
    $
    64,568
  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated(in thousands)
    
    Cost
    
    
    Gain
    
    
    Loss
    
    
    Fair Value2010Cash
    
    $
    14,817
    
    
    $
    
    
    
    $
    
    
    
    $
    14,817Money market securities
    
    
    2,901
    
    
    
    
    
    
    
    
    
    
    
    2,901Corporate
bonds and commercial paper
    
    
    5,815
    
    
    
    
    
    
    
    
    
    
    
    5,815Cash and cash
equivalents
    
    $
    23,533
    
    
    $
    
    
    
    $
    
    
    
    $
    23,533Money market securities
    
    $
    502
    
    
    $
    
    
    
    $
    
    
    
    $
    502Restricted cash
    
    $
    502
    
    
    $
    
    
    
    $
    
    
    
    $
    502U.S.
government securities
    
    $
    2,700
    
    
    $
    
    
    
    $
    
    
    
    $
    2,700U.S. agency securities
    
    
    1,407
    
    
    
    
    
    
    
    
    
    
    
    1,407Corporate
bonds and commercial paper
    
    
    57,501
    
    
    
    
    
    
    
    (35
    )
    
    
    57,466Short-term investments
    
    $
    61,608
    
    
    $
    1
    
    
    $
    (35
    )
    
    $
    61,5742009Cash
    
    $
    47,590
    
    
    $
    
    
    
    $
    
    
    
    $
    47,590Money market securities
    
    
    5,941
    
    
    
    
    
    
    
    
    
    
    
    5,941U.S.
government securities
    
    
    5,021
    
    
    
    1
    
    
    
    (2
    )
    
    
    5,020Corporate
bonds and commercial paper
    
    
    3,500
    
    
    
    
    
    
    
    
    
    
    
    3,500Cash and cash
equivalents
    
    $
    62,053
    
    
    $
    
    
    
    $
    (2
    )
    
    $
    62,051U.S. government
securities
    
    $
    1,012
    
    
    $
    
    
    
    $
    
    
    
    $
    1,012U.S. agency securities
    
    
    1,504
    
    
    $
    1
    
    
    
    
    
    
    
    1,505Short-term investments
    
    $
    2,516
    
    
    $
    1
    
    
    $
    
    
    
    $
    2,517
  85




---



##### Table of Contents



Opening
    
    
    
    
    
    
    RemainingLiability at
    
    
    Liability at
    
    
    
    
    
    
    Liability atDecember 31,
    
    
    October 22,
    
    
    Gain (loss) on
    
    
    December 31,(In thousands)
    
    2009
    
    
    2010
    
    
    warrants
    
    
    2010Warrant liability
    
    
    
    
    
    $
    15,365
    
    
    $
    96
    
    
    $
    15,269
 7. PROPERTY AND EQUIPMENT
 Accumulated
    
    
    Net BookCost
    
    
    Depreciation
    
    
    Value(In thousands)
    
    $
    
    
    $
    
    
    $December 31, 2010Computer equipment
    
    
    332
    
    
    
    284
    
    
    
    48Furniture and fixtures
    
    
    113
    
    
    
    102
    
    
    
    11Leasehold improvements
    
    
    54
    
    
    
    42
    
    
    
    12Equipment under capital lease
    
    
    66
    
    
    
    50
    
    
    
    16565
    
    
    
    478
    
    
    
    87December 31, 2009Computer equipment
    
    
    276
    
    
    
    271
    
    
    
    5Furniture and fixtures
    
    
    113
    
    
    
    90
    
    
    
    23Leasehold improvements
    
    
    42
    
    
    
    42
    
    
    
    Equipment under capital lease
    
    
    66
    
    
    
    22
    
    
    
    44497
    
    
    
    425
    
    
    
    72
  86




---



##### Table of Contents



8. RESTRUCTURING ACTIVITIES
   Remaining
    
    
    Amortization
    
    
    Additional
    
    
    RemainingLiability at
    
    
    of excess
    
    
    Liability
    
    
    Liability(In thousands)
    
    December 31, 2009
    
    
    lease facility
    
    
    Recorded
    
    
    at December 31, 2010Current portion
of excess lease
facility
    
    $
    1,297
    
    
    $
    140
    
    
    $
    146
    
    
    $
    1,303Long-term
portion of
excess lease
facility
    
    $
    3,348
    
    
    $
    1,076
    
    
    $
    3,892
    
    
    $
    6,164Total
    
    $
    4,645
    
    
    $
    1,216
    
    
    $
    4,038
    
    
    $
    7,467
 9. OTHER ASSETS
  10. INCOME TAX
   87




---



##### Table of Contents



(In thousands)
    
    2010
    
    
    2009
    
    
    2008Income taxes at statutory rates (at a rate of 34% for all periods presented)
    
    
    (5,298
    )
    
    
    (838
    )
    
    
    (3,635
    )Expenses not
deducted for tax purposes (1)
    
    
    425
    
    
    
    151
    
    
    
    3,991Effect of tax rate changes on deferred tax assets and liabilities
    
    
    
    
    
    
    
    
    
    
    Effect of foreign tax (Canadian) rate changes on deferred tax assets and
liabilities
    
    
    614
    
    
    
    (130
    )
    
    
    974Reduction in benefit of operating losses
    
    
    1,939
    
    
    
    542
    
    
    
    339Reduction in the benefit of other tax attributes
    
    
    394
    
    
    
    367
    
    
    
    Impact of withholding tax
    
    
    (3,000
    )
    
    
    3,000
    
    
    
    Foreign exchange effect on valuation allowance
    
    
    (534
    )
    
    
    (1,437
    )
    
    
    2,244Investment tax credits
    
    
    (252
    )
    
    
    (180
    )
    
    
    (180
    )Research and development tax credits
    
    
    
    
    
    
    (32
    )
    
    
    Change in valuation allowance
    
    
    2,620
    
    
    
    1,628
    
    
    
    1,643Reversal of tax effect of income of Sonus prior to the Arrangement (2)
    
    
    
    
    
    
    
    
    
    
    (5,310
    )Canadian Part VI.1 tax on redeemable convertible preferred shares (3)
    
    
    
    
    
    
    
    
    
    
    (2,125
    )Part VI.I tax deduction
    
    
    
    
    
    
    
    
    
    
    Book to tax return adjustments
    
    
    92
    
    
    
    (60
    )
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Income tax expense
    
    
    (3,000
    )
    
    
    3,011
    
    
    
    (2,059
    )
 (1)
    
    The 2008 balance was primarily attributable to amounts recognized in connection with the
Arrangement, including facility-related charges and the conversion of redeemable convertible
preferred shares into equity following the Arrangement.(2)
    
    This line item represents the adjustment required to the 2008 tax provision for amounts
associated with Sonus during the portion of the year prior to the Arrangement. The amount of $5,310
represents the pre-arrangement loss of Sonus of $15,617 multiplied by the US Federal Statutory tax
rate of 34%. Offsetting the $5,310 was $5,310 included in line item Change in valuation
allowance.(3)
    
    Canadian Part VI.1 tax on redeemable convertible preferred shares was accrued during each year
such shares were outstanding. This tax would have been payable upon retraction of redeemable
convertible preferred shares. These shares would have been retractable at any time after August
10. 2010. In 2008, subsequent to the completion of the Arrangement, all convertible redeemable
preferred shares were converted into equity and as a result the associated aggregate tax liability
was reversed.
    88




---



##### Table of Contents



Investment
    
    
    Net Operating
    
    
    Non-capitalTax Credits
    
    
    Losses
    
    
    Losses$
    
    
    $2011
    
    
    
    
    
    
    47
    
    
    
    2012
    
    
    
    
    
    
    44
    
    
    
    2013
    
    
    
    
    
    
    10,795
    
    
    
    2014
    
    
    
    
    
    
    
    
    
    
    1,7072015
    
    
    
    
    
    
    
    
    
    
    2016
    
    
    
    
    
    
    
    
    
    
    2017
    
    
    
    
    
    
    
    
    
    
    2018
    
    
    9
    
    
    
    
    
    
    
    2019
    
    
    68
    
    
    
    32
    
    
    
    2020
    
    
    (12
    )
    
    
    2,745
    
    
    
    2021
    
    
    2
    
    
    
    400
    
    
    
    2022
    
    
    2
    
    
    
    11,766
    
    
    
    2023
    
    
    1
    
    
    
    10,785
    
    
    
    2024
    
    
    
    
    
    
    16,814
    
    
    
    2025
    
    
    244
    
    
    
    2,062
    
    
    
    7,4072026
    
    
    71
    
    
    
    27,157
    
    
    
    4,9822027
    
    
    
    
    
    
    22,225
    
    
    
    5,6502028
    
    
    28
    
    
    
    12,648
    
    
    
    2,4102029
    
    
    123
    
    
    
    4,357
    
    
    
    2030
    
    
    205
    
    
    
    5,034
    
    
    
    6,124741
    
    
    
    126,911
    
    
    
    28,280
   2010
    
    
    2009$
    
    
    $Deferred tax assets:Tax basis in excess of book value of assets
    
    
    1,187
    
    
    
    1,202Non-capital loss carryforwards
    
    
    50,220
    
    
    
    48,588Research and development deductions and credits
    
    
    4,679
    
    
    
    4,210Share issue costs
    
    
    83
    
    
    
    119Stock options
    
    
    1,475
    
    
    
    1,689Capital loss carryforward
    
    
    51
    
    
    
    51Restructuring liability
    
    
    2,717
    
    
    
    1,697Foreign tax credit
    
    
    
    
    
    
    3,273Other
    
    
    27
    
    
    
    27Total deferred tax assets
    
    
    60,439
    
    
    
    60,856Valuation allowance
    
    
    (60,439
    )
    
    
    (60,856
    )
   89




---



##### Table of Contents



(in thousands)
    
    $Balance as of December 31, 2008
    
    
    1,956Additions based on tax positions related to the current year
    
    
    143Deductions based on tax positions related to the current year
    
    
    (90
    )Balance as of December 31, 2009
    
    
    2,009Additions based on tax positions related to the current year
    
    
    48Deductions based on tax positions related to the current year
    
    
    (50
    )Balance as of December 31, 2010
    
    
    2,007
    Tax
    
    Years open toJurisdiction
    
    examinationCanada
    
    
    2004 to 2010US
    
    
    2004 to 2010
 11. COMMON STOCK
    July 2009 Financing
   90




---



##### Table of Contents



2009 Teva Share Purchase Agreement
  October 2010 Public Offering
     Stock Option Exercises
     91




---



##### Table of Contents



2010 Performance Incentive Plan
   ASC 718 Compensation  Stock Compensation
  Share-Based Payment
  Years endedDecember 31,2010
    
    
    2009
    
    
    2008Risk-free interest rates
    
    
    2.73
    %
    
    
    2.85
    %
    
    
    1.71
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Expected life
    
    6.8 years
    
    
    6.1 years
    
    
    5.2 yearsExpected volatility
    
    
    75
    %
    
    
    74
    %
    
    
    77
    %
  92




---



##### Table of Contents



Years endedDecember 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008$
    
    
    $
    
    
    $Research and development
    
    
    331
    
    
    
    88
    
    
    
    65General and administrative
    
    
    311
    
    
    
    292
    
    
    
    109Total share-based compensation
    
    
    642
    
    
    
    380
    
    
    
    174
   Numberof
    
    
    WeightedOptioned
    
    
    AverageCommon
    
    
    ExerciseShares
    
    
    Price#
    
    
    $Balance, December 31, 2007
    
    
    324,231
    
    
    
    4.61Additions from Sonus Option Plans
    
    
    98,249
    
    
    
    27.89Option grants
    
    
    397,150
    
    
    
    2.93Option exercises
    
    
    (34,601
    )
    
    
    3.57Option cancellations
    
    
    (61,886
    )
    
    
    28.08Balance, December 31, 2008
    
    
    723,143
    
    
    
    4.88Option grants
    
    
    130,400
    
    
    
    17.52Option cancellations
    
    
    (8,154
    )
    
    
    7.04Option exercises
    
    
    (37,388
    )
    
    
    3.79Option forfeited
    
    
    (5,130
    )
    
    
    6.42Balance, December 31, 2009
    
    
    802,871
    
    
    
    6.95Option grants
    
    
    170,872
    
    
    
    15.87Option cancellations
    
    
    (7,311
    )
    
    
    104.91Option exercises
    
    
    (194,956
    )
    
    
    4.22Option forfeited
    
    
    (26,563
    )
    
    
    7.35Balance, December 31, 2010
    
    
    744,913
    
    
    
    8.73
  93




---



##### Table of Contents



Weighted-
    
    
    
    
    
    
    
    
    
    
    Weighted-Average
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    
    
    
    
    
    
    
    
    RemainingNumber of
    
    
    Contractual
    
    
    Number of
    
    
    
    
    
    
    ContractualOptions
    
    
    Life
    
    
    Options
    
    
    Exercise
    
    
    LifeExercise Prices
    
    Outstanding
    
    
    (in years)
    
    
    Exercisable
    
    
    Price
    
    
    (in years)2.69
    
    
    34,000
    
    
    
    4.8
    
    
    
    34,000
    
    
    
    2.69
    
    
    
    4.83.00
    
    
    268,150
    
    
    
    5.0
    
    
    
    132,950
    
    
    
    3.00
    
    
    
    5.03.89
    
    
    23,200
    
    
    
    0.2
    
    
    
    23,200
    
    
    
    3.89
    
    
    
    0.24.11
    
    
    131,488
    
    
    
    1.7
    
    
    
    131,488
    
    
    
    4.11
    
    
    
    1.76.66
    
    
    4,859
    
    
    
    7.2
    
    
    
    4,859
    
    
    
    6.66
    
    
    
    7.27.25
    
    
    16,520
    
    
    
    5.4
    
    
    
    16,520
    
    
    
    7.25
    
    
    
    5.412.03
    
    
    8,000
    
    
    
    9.6
    
    
    
    833
    
    
    
    12.03
    
    
    
    9.614.01
    
    
    2,500
    
    
    
    9.5
    
    
    
    312
    
    
    
    14.01
    
    
    
    9.514.20
    
    
    13,976
    
    
    
    9.4
    
    
    
    
    
    
    
    14.2
    
    
    
    9.415.11
    
    
    5,500
    
    
    
    9.6
    
    
    
    
    
    
    
    15.11
    
    
    
    9.615.97
    
    
    131,450
    
    
    
    10
    
    
    
    
    
    
    
    15.97
    
    
    
    1018.94
    
    
    12,169
    
    
    
    3.5
    
    
    
    12,169
    
    
    
    18.94
    
    
    
    3.521.05
    
    
    9,446
    
    
    
    6.2
    
    
    
    2,361
    
    
    
    21.05
    
    
    
    6.222.28
    
    
    83,100
    
    
    
    8.8
    
    
    
    20,775
    
    
    
    22.28
    
    
    
    8.868.25
    
    
    555
    
    
    
    0.8
    
    
    
    555
    
    
    
    68.25
    
    
    
    0.88.73
    
    
    744,913
    
    
    
    5.75
    
    
    
    380,022
    
    
    
    5.44
    
    
    
    3.76
       94




---



##### Table of Contents



Years endedDecember 31,2010
    
    
    2009
    
    
    2008Risk-free interest rates
    
    
    2.01
    %
    
    
    
    
    
    
    Expected dividend yield
    
    
    0
    %
    
    
    
    
    
    
    Expected life
    
    4.8 years
    
    
    
    
    
    
    
    Expected volatility
    
    
    75
    %
    
    
    
    
    
    
    
        95




---



##### Table of Contents



Years ended December 31,(in thousands except shares and per share amounts)
    
    2010
    
    
    2009
    
    
    2008NumeratorLoss attributable to common shareholders as reported
    
    $
    12,584
    
    
    $
    5,476
    
    
    $
    6,177DenominatorWeighted average number of common shares outstanding
    
    
    7,030,903
    
    
    
    5,766,850
    
    
    
    1,829,276Basic and diluted loss per common share
    
    $
    1.79
    
    
    $
    0.95
    
    
    $
    3.38Earnings per
share associated with $4,428 extraordinary gain
    
    $
    
    
    
    
    
    
    
    
    2.42Basic and
diluted loss per common share excluding extraordinary gain
    
    $
    1.79
    
    
    $
    0.95
    
    
    $
    5.80
  12. RELATED PARTY TRANSACTIONS
  13. COMMITMENTS AND CONTINGENCIES
 Teva Pharmaceutical Industries Ltd.
    Isis Pharmaceuticals Inc. and University of British Columbia
    96




---



##### Table of Contents



Bayer HealthCare LLC
    97




---



##### Table of Contents



Lease Arrangements
   CAD2011
    
    $
    1282012
    
    
    1072013
    
    
    1072014
    
    
    80Total
    
    $
    422
   2011
    
    
    2,0552012
    
    
    2,1172013
    
    
    2,1802014
    
    
    2,2462015
    
    
    2,313Remainder
    
    
    4,837Total
    
    $
    15,748
  Guarantees and Indemnifications
     98




---



##### Table of Contents



14. COMPREHENSIVE LOSS
 Year ended December 31,(in thousands)
    
    2010
    
    
    2009
    
    
    2008$
    
    
    $
    
    
    $Loss for the period
    
    
    12,584
    
    
    
    5,476
    
    
    
    4,204Unrealized loss on cash equivalents
and marketable securities
    
    
    35
    
    
    
    
    
    
    
    Unrealized loss on foreign exchange
    
    
    
    
    
    
    
    
    
    
    312,619
    
    
    
    5,476
    
    
    
    4,207
 15. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
 Quarter EndedDec. 31
    
    
    Sept. 30
    
    
    Jun. 30
    
    
    Mar. 31(in thousands, except per share amounts)2010Collaboration revenue
    
    $
    2,334
    
    
    
    4,881
    
    
    
    1,701
    
    
    
    4,700Research and development
    
    $
    2,301
    
    
    
    6,723
    
    
    
    3,079
    
    
    
    6,380General and administrative
    
    $
    1,948
    
    
    
    1,067
    
    
    
    1,475
    
    
    
    1,350Restructuring expense
    
    
    
    
    
    
    4,038
    
    
    
    
    
    
    
    Total expenses
    
    $
    4,249
    
    
    
    11,828
    
    
    
    4,554
    
    
    
    7,730Other income (expense)
    
    $
    (885
    )
    
    
    53
    
    
    
    7
    
    
    
    (14
    )Tax expense (recovery)
    
    $
    
    
    
    
    
    
    
    
    (3,000
    )
    
    
    Net loss
(income) attributable to common shareholders
    
    $
    2,800
    
    
    
    6,894
    
    
    
    (154
    )
    
    
    3,044Net loss (income) per share*:
    
    $
    0.31
    
    
    
    1.07
    
    
    
    (.02
    )
    
    
    0.48Basic and diluted2009Collaboration revenue
    
    $
    25,539
    
    
    $
    
    
    
    $
    
    
    
    $
    Research and development
    
    $
    13,908
    
    
    $
    1,513
    
    
    $
    3,094
    
    
    $
    1,694General and administrative
    
    $
    1,291
    
    
    $
    885
    
    
    $
    1,003
    
    
    $
    782Restructuring expense
    
    
    3,457
    
    
    
    
    
    
    
    494
    
    
    
    Total expenses
    
    $
    18,656
    
    
    $
    2,398
    
    
    $
    4,591
    
    
    $
    2,476Other income (expense)
    
    $
    (3
    )
    
    $
    29
    
    
    $
    34
    
    
    $
    57Tax expense (recovery)
    
    $
    2,999
    
    
    $
    16
    
    
    $
    6
    
    
    $
    (10
    )Net loss
(income) attributable to common shareholders
    
    $
    (3,881
    )
    
    $
    2,385
    
    
    $
    4,563
    
    
    $
    2,409Net loss (income) per share*:Basic and diluted
    
    $
    (0.64
    )
    
    $
    0.40
    
    
    $
    0.82
    
    
    $
    0.43
 *
    
    Quarterly EPS may not add to annual figure due to rounding. 16. SUBSEQUENT EVENTS
   99




---



##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  Managements Report on Internal Control over Financial Reporting
     
 ITEM 9B.
    
    OTHER INFORMATION
   100




---



##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  (a)
    
    
    (b)
    
    
    (c)Number of securities remainingNumber of securities to be
    
    
    Weighted-average
    
    
    available for future issuanceissued upon exercise of
    
    
    exercise price of
    
    
    under equity compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securities reflected inPlan category
    
    warrants and rights
    
    
    warrants and rights
    
    
    column (a))Equity
compensation plans
approved by security
holders
    
    
    734,195
    (1)
    
    $
    8.82
    (1)
    
    
    291,074
    (1)Equity compensation
plans not approved by
security
holders(2)
    
    
    10,718
    
    
    
    2.69
    
    
    
    0Total
    
    
    744,913
    
    
    $
    8.73
    
    
    
    291,074
 (1)
    
    As of December 31, 2010, we maintained the following equity compensation plans, which were
adopted by Sonus prior to the Arrangement: (a) Incentive Stock Option, Nonqualified Stock Option
and Restricted Stock Purchase Plan  1991, (b) 1999 Nonqualified Stock Incentive Plan, or the 1999 Plan, (c) the 2000 Stock
Incentive Plan, (d) the 2007 Performance Incentive Plan, (e) the OncoGenex Technologies Amended and
Restated Stock Option Plan and (f) the 2010 Performance Incentive Plan.(2)
    
    The 1999 Plan is a broad-based plan for which stockholder approval was not required or
obtained. On February 11, 2010, the 1999 Plan terminated in accordance with its terms. All stock
options, rights to purchase, and restricted stock outstanding as of such time will continue in
effect in accordance with their respective terms. Stock options granted under the 1999 Plan were
generally granted with an exercise price equal to fair market value on the date of grant. Pursuant
to the 1999 Plan, upon a change in control, the vesting period for outstanding options, rights to
purchase, and restricted stock granted under the 1999 Plan will accelerate and the administrator of
the 1999 Plan may provide for the purchase or exchange of each option or right to purchase, adjust
the terms of each option or right to purchase, cause the options and rights to purchase to be
assumed, or new rights substituted therefor, or make such other provision as the administrator
determines is equitable.   101




---



##### Table of Contents



ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   102




---



##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  Report of Independent Registered Public Accounting Firm
    
    
    68Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    70Consolidated Statements of Loss for the years ended December 31, 2010, 2009, and 2008
    
    
    71Consolidated Statements of Stockholders Equity for the years ended December 31,
2010, 2009, and 2008
    
    
    72Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009,
and 2008
    
    
    73Notes to Consolidated Financial Statements
    
    
    74
   ExhibitNumber
    
    Description2.1
    (1)
    
    Arrangement Agreement between the Company and OncoGenex Technologies Inc. dated May 27, 20082.2
    (2)
    
    First Amendment to Arrangement Agreement between the Company and OncoGenex Technologies Inc.
dated August 11, 20082.3
    (2)
    
    Second Amendment to Arrangement Agreement between the Company and OncoGenex Technologies Inc.
dated August 15, 20083.1
    (3)
    
    Amended and Restated Certificate of Incorporation (As Amended Through October 17, 1995)3.2
    (4)
    
    Certificate of Amendment to Certificate of Incorporation filed on May 6, 19993.3
    (5)
    
    Certificate of Correction filed on March 9, 2010 to Certificate of Amendment filed on May 6, 19993.4
    (6)
    
    Certificate of Amendment to Certificate of Incorporation filed on May 7, 20043.5
    (5)
    
    Certificate of Correction filed on March 9, 2010 to Certificate of Amendment filed on May 7, 20043.6
    (2)
    
    Certificate of Amendment to Certificate of Incorporation filed on August 20, 20083.7
    (7)
    
    Certificate of Amendment to Certificate of Incorporation filed on June 8, 20103.8
    (7)
    
    Fourth Amended and Restated Bylaws of Oncogenex Pharmaceuticals, Inc.
  103




---



##### Table of Contents



ExhibitNumber
    
    Description4.1
    (2)
    
    Specimen Certificate of Common Stock4.2
    (8)
    
    Amended and Restated Rights Agreement dated as of July 24, 2002 between Sonus Pharmaceuticals
Inc. and U.S. Stock Transfer Corporation4.3
    (9)
    
    First Amendment to Amended and Restated Rights Agreement dated as of October 17, 2005 between
Sonus Pharmaceuticals Inc. and U.S. Stock Transfer Corporation4.4
    (10)
    
    Second Amendment to Amended and Restated Rights Agreement dated as of August 10, 2006 between
Sonus Pharmaceuticals Inc. and U.S. Stock Transfer Corporation4.5
    (11)
    
    Third Amendment to Amended and Restated Rights Agreement dated May 27, 2008 between Sonus
Pharmaceuticals Inc. and Computershare Trust Company, N.A.4.6
    (1)
    
    Form of Escrow Agreement between the Company, Computershare Trust Company of Canada and former
shareholders and debentureholders of OncoGenex Technologies Inc.4.7
    (1)
    
    Form of OncoGenex Voting Agreement4.8
    (1)
    
    Form of Sonus Voting Agreement10.1
    (3)
    
    Sonus Pharmaceuticals, Inc. Incentive Stock Option, Nonqualified Stock Option and Restricted
Stock Purchase Plan  1991 (the 1991 Plan), as amended10.2
    (3)
    
    Form of Incentive Option Agreement (pertaining to the 1991 Plan)10.3
    (3)
    
    Form of Sonus Pharmaceuticals, Inc. Nonqualified Stock Option Agreement under the 1991 Plan10.4
    (4)
    
    Sonus Pharmaceuticals, Inc. 1999 Nonqualified Stock Incentive Plan (the 1999 Plan)10.5
    (4)
    
    Form of Sonus Pharmaceuticals, Inc. Nonqualified Stock Option Agreement under the 1999 Plan10.6
    (4)
    
    Form of Sonus Pharmaceuticals, Inc. Restricted Stock Purchase Agreement under the 1999 Plan10.7
    (12)
    
    Sonus Pharmaceuticals, Inc. 2000 Stock Incentive Plan (the 2000 Plan)10.8
    (13)
    
    First Amendment to Sonus Pharmaceuticals, Inc. 2000 Plan10.9
    (12)
    
    Form of Sonus Pharmaceuticals, Inc. Stock Option Agreement (pertaining to the 2000 Plan)10.10
    (14)
    
    Sonus Pharmaceuticals, Inc. 2007 Performance Incentive Plan (the 2007 Plan)10.11
    (15)
    
    Form of Sonus Pharmaceuticals, Inc. Stock Option Agreement (pertaining to the 2007 Plan)10.12
    (15)
    
    Form of Sonus Pharmaceuticals, Inc. Restricted Stock Purchase Agreement under the 2007 Plan10.13
    (16)
    
    OncoGenex Technologies Inc. Amended and Restated Stock Option Plan10.14
    (17)
    
    Stock Option Assumption, Amending and Confirmation Agreement dated as of August 21, 2009 between
the Company and OncoGenex Technologies Inc.10.15
    (18)
    
    Form of OncoGenex Pharmaceuticals, Inc 2010 Stock Option Agreement10.16
    (18)
    
    Form of OncoGenex Pharmaceuticals, Inc. 2010 Restricted Stock Purchase Agreement
  104




---



##### Table of Contents



ExhibitNumber
    
    Description10.17
    (19)
    
    OncoGenex Pharmaceuticals, Inc. Short Term Incentive Awards Program10.18
    (19)
    
    Agreement and Consent Form (related to the Short Term Incentive Awards Program)10.19
    (20)
    
    OncoGenex Pharnaceuticals, Inc. 2010 Performance Incentive Plan10.20
    (3)
    
    Form of Indemnification Agreement for Officers and Directors of the Company10.21
    (16)
    
    Form of Indemnification Agreement between OncoGenex Technologies Inc. and each of Scott Cormack,
Stephen Anderson and Cindy Jacobs10.22
    (16)
    
    Form of Indemnification Agreement between OncoGenex Technologies Inc. and Neil Clendeninn10.23
    (2)
    
    Executive Termination Agreement and General Release dated August 21, 2008 between the Company
and Michael Martino10.24
    (2)
    
    Executive Termination Agreement and General Release dated August 21, 2008 between the Company
and Alan Fuhrman10.25
    (21)
    
    Employment Agreement between OncoGenex Technologies Inc. and the Company and Scott Cormack dated
as of November 4, 200910.26
    (21)
    
    Employment Agreement between OncoGenex Technologies Inc. and the Company and Stephen Anderson
dated as of November 4, 200910.27
    (22)
    
    Amendment dated February 24, 2010 to the Employment Agreement between OncoGenex Technologies
Inc. and Stephen Anderson 10.28
    (21)
    
    Employment Agreement between the Company and Cindy Jacobs dated as of November 3, 200910.29
    (23)
    
    Employment Agreement dated October 14, 2008 between OncoGenex Technologies Inc. and Cameron
Lawrence10.30
    (23)
    
    Employment Amending Agreement dated January 1, 2009 between OncoGenex Technologies Inc. and
Cameron Lawrence10.31
    (24)
    
    Employment Agreement dated November 5, 2010 between OncoGenex Technologies Inc. and Michelle
Burris10.32
    (25)
    
    Securities Purchase Agreement dated as of August 15, 2005 by and among Sonus Pharmaceuticals
Inc. and the investors named therein10.33
    (25)
    
    Form of Purchase Warrant related to the Securities Purchase Agreement10.34
    (26)
    
    Form of Purchase Warrant issued to Schering AG10.35
    (27)
    
    Form of Warrant to Purchase Common Stock10.36
    (25)
    
    Registration Rights Agreement dated as of August 15, 2005 by and among Sonus Pharmaceuticals
Inc. and the investors named therein10.37
    (28)
    
    Lease by and between BMR-217th Place LLC and the Company dated as of November 21, 2006
  105




---



##### Table of Contents



ExhibitNumber
    
    Description10.38
    (29)
    
    First Amendment to Lease by and between BMR-217th Place LLC and the Company dated as of August
17, 200710.39
    (30)
    
    Second Amendment to Lease by and between BMR-217th Place LLC and the Company dated as of January
28, 200810.40
    (6)
    
    Amended and Restated License Agreement effective as of July 2, 2008 by and between OncoGenex
Technologies Inc. and Isis Pharmaceuticals, Inc. (OGX-011)*10.41
    (31)
    
    Letter Agreement Regarding Certain Sublicense Consideration for OGX-011 between OncoGenex
Technologies Inc. and Isis Pharmaceuticals, Inc. dated December 18, 200910.42
    (31)
    
    Amendment No. 1 to Amended and Restated License Agreement between OncoGenex Technologies Inc.
and Isis Pharmaceuticals, Inc. dated December 19, 2009 (OGX-011)*10.43
    (32)
    
    License Agreement between OncoGenex Technologies Inc. and the University of British Columbia
effective as of November 1, 2001, and Amending Agreement dated as of August 30, 2006 (OGX-011)*10.44
    (2)
    
    Second Amending Agreement and Consent as of August 7, 2008 between the University of British
Columbia and OncoGenex Technologies Inc. (OGX-011)10.45
    (31)
    
    Third Amending Agreement to the License Agreement between OncoGenex Technologies Inc and the
University of British Columbia dated as of December 20, 2009 (OGX-011)*10.46
    (32)
    
    Collaboration and License Agreement between OncoGenex Technologies Inc. and Isis
Pharmaceuticals, Inc. effective as of January 5, 2005 (OGX-427)*10.47
    (32)
    
    License Agreement between OncoGenex Technologies Inc. and the University of British Columbia
effective as of April 5, 2005, and Amending Agreement dated as of August 30, 2006 (OGX-427)*10.48
    (2)
    
    Second Amending Agreement as of August 7, 2008 between the University of British Columbia and
OncoGenex Technologies Inc. (OGX-427)10.49
    (31)
    
    Collaboration and License Agreement between OncoGenex Technologies Inc. and Teva Pharmaceutical
Industries Ltd. dated as of December 20, 2009 (OGX-011)*21.1
    
    
    Subsidiaries of the Registrant23.1
    
    
    Consent of Ernst & Young LLP31.1
    
    
    Certification of President and Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 200231.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
200232.1
    
    
    Certification of President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  106




---



##### Table of Contents



ExhibitNumber
    
    Description32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
 
    
    Schedules and similar attachments to the Arrangement Agreement have been omitted pursuant
to Item 601(b)(2) of Regulation S-K. The Company will furnish supplementally a copy of
any omitted schedule or similar attachment to the SEC upon request.
    
    Indicates management contract or compensatory plan or arrangement.*
    
    Confidential portions of this exhibit have been omitted and filed separately with the
Commission pursuant to an application for Confidential Treatment under Rule 24b-2
promulgated under the Securities Exchange Act of 1934, as amended.(1)
    
    Incorporated by reference to the Companys proxy statement on Schedule 14A filed on July
3, 2008.(2)
    
    Incorporated by reference to the Companys quarterly report on Form 10-Q for the quarter
ended September 30, 2008.(3)
    
    Incorporated by reference to the Companys Registration Statement on Form S-1, Reg. No.
33-96112.(4)
    
    Incorporated by reference to Companys quarterly report on Form 10-Q for the quarter
ended March 31, 1999.(5)
    
    Incorporated by reference to the Companys current report on Form 8-K filed on March 11,
2009.(6)
    
    Incorporated by reference to the Companys annual report on Form 10-K for the year ended
December 31, 2008.(7)
    
    Incorporated by reference to the Companys current report on Form 8-K filed on June 14,
2010.(8)
    
    Incorporated by reference to the Companys amended Form 8-A filed on July 25, 2002.(9)
    
    Incorporated by reference to the Companys amended Form 8-A filed on October 18, 2005.(10)
    
    Incorporated by reference to the Companys amended Form 8-A filed on August 14, 2006.(11)
    
    Incorporated by reference to the Companys current report on Form 8-K filed on May 30,
2008.(12)
    
    Incorporated by reference to the Companys quarterly report on Form 10-Q for the quarter
ended June 30, 2000.(13)
    
    Incorporated by reference to the Companys quarterly report on Form 10-Q for the quarter
ended September 30, 2006.(14)
    
    Incorporated by reference to the Companys proxy statement on Schedule 14A filed on April
3, 2007.  107




---



##### Table of Contents



(15)
    
    Incorporated by reference to the Companys quarterly report on Form 10-Q for the quarter
ended September 30, 2007.(16)
    
    Incorporated by reference to the OncoGenex Technologies Inc. registration statement on
Form F-1 filed on December 13, 2006.(17)
    
    Incorporated by reference to the Companys registration statement on Form S-8 filed on
August 26, 2008.(18)
    
    Incorporated by reference to the Companys current report on Form 8-K filed on June 14,
2010.(19)
    
    Incorporated by reference to the Companys current report on Form 8-K filed on April 2,
2009.(20)
    
    Incorporated by reference to the Companys definitive proxy statement on Schedule 14A
filed on April 19, 2010.(21)
    
    Incorporated by reference to the Companys quarterly report on Form 10-Q for the quarter
ended September 30, 2009.(22)
    
    Incorporated by reference to the Companys current report on Form 8-K filed February 25,
2010.(23)
    
    Incorporated by reference to the Companys current report on Form 8-K filed March 1, 2010.(24)
    
    Incorporated by reference to the Companys current report on Form 8-K filed on November
8, 2010.(25)
    
    Incorporated by reference to the Companys current report on Form 8-K filed on August 18,
2005.(26)
    
    Incorporated by reference to the Schedule 13D filed by Schering Berlin Venture
Corporation on October 31, 2005.27
    
    Incorporated by reference to the Companys current report on Form 8-K filed on October
19, 2010.(28)
    
    Incorporated by reference to the Companys annual report on Form 10-K for the year ended
December 31, 2006.(29)
    
    Incorporated by reference to the Companys annual report on Form 10-K for the year ended
December 31, 2007.(30)
    
    Incorporated by reference to the Companys quarterly report on Form 10-Q for the quarter
ended March 31, 2008.(31)
    
    Incorporated by reference to the Companys annual report on Form 10-K for the year ended
December 31, 2009.(32)
    
    Incorporated by reference to the OncoGenex Technologies Inc. registration statement on
Form F-1, Amendment No. 1, filed on January 29, 2007.  108




---



##### Table of Contents



SIGNATURES
  ONCOGENEX PHARMACEUTICALS, INC.
(Registrant)Date: March 10, 2011
    By:
    /s/ SCOTT CORMACKScott CormackChief Executive Officer and President
(principal executive officer)  By:
    
    /s/ SCOTT CORMACK

Scott Cormack
    
    Chief Executive Officer, President and
Director (principal executive officer)
    
    Date: March 10, 2011By:
    
    /s/ MICHELLE BURRIS

Michelle Burris
    
    Executive Vice President, Operations and Chief
Financial Officer (principal financial officer)
    
    Date: March 10, 2011By:
    
    /s/ JACK GOLDSTEIN

Jack Goldstein
    
    Chairman of the Board and Director
    
    Date: March 10, 2011By:
    
    /s/ NEIL CLENDENINN

Neil Clendeninn
    
    Director
    
    Date: March 10, 2011By:
    
    /s/ MARTIN MATTINGLY

Martin Mattingly
    
    Director
    
    Date: March 10, 2011By:
    
    /s/ H. STEWART PARKER

H. Stewart Parker
    
    Director
    
    Date: March 10, 2011By:
    
    /s/ DAVID SMITH

David Smith
    
    Director
    
    Date: March 10, 2011
  109