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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO .
 Commission file number 033-80623
 OncoGenex Pharmaceuticals, Inc.
  Delaware
    
    95-4343413(State or Other Jurisdiction of
    
    (I.R.S. Employer Identification Number)Incorporation or Organization)
 1522 217 th Place SE, Suite 100, Bothell, Washington 98021
 (425) 686-1500
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
  Class
    
    Outstanding at November 1, 2010Common Stock, $0.001 par value
    
    9,658,591




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##### 



OncoGenex Pharmaceuticals, Inc.
Index to Form 10-Q
 PageNumberPart I. Financial InformationItem 1. Financial Statements (unaudited)
    
    
    3Consolidated Balance Sheets as of September 30, 2010 (unaudited) and December 31, 2009
    
    
    3Consolidated Statements of Operations (unaudited) for the three and nine months ended
September 30, 2010 and September 30, 2009
    
    
    4Consolidated Statements of Cash Flows (unaudited) for the nine months ended September
30, 2010 and September 30, 2009
    
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 4. Controls and Procedures
    
    
    30Part II. Other InformationItem 1A. Risk Factors
    
    
    31Item 6. Exhibits
    
    
    31Items 1, 2, 3, 4, and 5 are not applicable and therefore have been omitted.Signatures
    
    
    31Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements
 OncoGenex Pharmaceuticals, Inc.
 
 Consolidated Balance Sheets
 (Unaudited)
  September 30,
    
    
    December 31,2010
    
    
    2009$
    
    
    $ASSETSCurrentCash and cash equivalents[note 4]
    
    
    11,781
    
    
    
    62,051Restricted cash [note 4 and note 7]
    
    
    502
    
    
    
    Short-term investments [note 4]
    
    
    30,286
    
    
    
    2,517Amounts receivable
    
    
    3,595
    
    
    
    3,109Prepaid expenses
    
    
    1,030
    
    
    
    722Total current assets
    
    
    47,194
    
    
    
    68,399Property and equipment, net
    
    
    70
    
    
    
    72Other assets
    
    
    509
    
    
    
    509Total assets
    
    
    47,773
    
    
    
    68,980LIABILITIES AND SHAREHOLDERS EQUITYCurrentAccounts payable and accrued liabilities
    
    
    2,123
    
    
    
    14,453Deferred Collaboration Revenue [note 3]
    
    
    10,000
    
    
    
    10,000Current portion of long-term obligations [note 6]
    
    
    1,344
    
    
    
    1,328Total current liabilities
    
    
    13,467
    
    
    
    25,781Deferred Collaboration Revenue, less current portion [note 3]
    
    
    13,043
    
    
    
    16,528Long-term obligation [note 6]
    
    
    6,960
    
    
    
    3,712Total liabilities
    
    
    33,470
    
    
    
    46,021Commitments and contingencies [note 7]Shareholders equity:Common shares [note 5]:$0.001 par value 25,000,000 shares authorized and 6,480,505
issued and outstanding at September 30, 2010 and 6,324,033
issued and
outstanding at December 31, 2009
    
    
    6
    
    
    
    6Additional paid-in capital
    
    
    74,926
    
    
    
    73,798Accumulated deficit
    
    
    (63,269
    )
    
    
    (53,485
    )Accumulated other comprehensive income
    
    
    2,640
    
    
    
    2,640Total shareholders equity
    
    
    14,303
    
    
    
    22,959Total liabilities and shareholders equity
    
    
    47,773
    
    
    
    68,980Subsequent events [note 9]
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OncoGenex Pharmaceuticals, Inc.
 
 Consolidated Statements of Operations
 (Unaudited)
  Three months
    
    
    Nine monthsEnded September 30,
    
    
    Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009$
    
    
    $
    
    
    $
    
    
    $COLLABORATION REVENUE[note 3]
    
    
    4,881
    
    
    
    
    
    
    
    11,282
    
    
    
    EXPENSESResearch and development
    
    
    6,723
    
    
    
    1,513
    
    
    
    16,182
    
    
    
    6,301General and administrative
    
    
    1,067
    
    
    
    885
    
    
    
    3,892
    
    
    
    2,670Restructuring expense [note 6]
    
    
    4,038
    
    
    
    
    
    
    
    4,038
    
    
    
    494Total expenses
    
    
    11,828
    
    
    
    2,398
    
    
    
    24,112
    
    
    
    9,465OTHER INCOME (EXPENSE)Interest income
    
    
    25
    
    
    
    5
    
    
    
    44
    
    
    
    41Other
    
    
    28
    
    
    
    24
    
    
    
    2
    
    
    
    79Total other income (expense)
    
    
    53
    
    
    
    29
    
    
    
    46
    
    
    
    120Loss for the period before
income taxes
    
    
    6,894
    
    
    
    2,369
    
    
    
    12,784
    
    
    
    9,345Income tax expense (recovery) [note 3]
    
    
    
    
    
    
    16
    
    
    
    (3,000
    )
    
    
    12Net loss
    
    
    6,894
    
    
    
    2,385
    
    
    
    9,784
    
    
    
    9,357Basic and diluted loss per common
share
    
    
    1.07
    
    
    
    0.40
    
    
    
    1.53
    
    
    
    1.65Weighted average number of common
shares
    
    
    6,453,950
    
    
    
    5,906,059
    
    
    
    6,396,210
    
    
    
    5,671,158
   4




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OncoGenex Pharmaceuticals, Inc.
 
 Consolidated Statements of Cash Flows
 (Unaudited)
  Nine months endedSeptember 30,2010
    
    
    2009$
    
    
    $OPERATING ACTIVITIESLoss for the period
    
    
    (9,784
    )
    
    
    (9,357
    )Add items not involving cashDepreciation and amortization
    
    
    39
    
    
    
    38Stock-based compensation [note 5(c)]
    
    
    462
    
    
    
    290Restructuring expense [note 6]
    
    
    4,038
    
    
    
    494Changes in non-cash working capital itemsAmounts receivable
    
    
    (486
    )
    
    
    122Investment tax credit recoverable
    
    
    
    
    
    
    1,090Restricted cash
    
    
    (502
    )
    
    
    Prepaid expenses
    
    
    (308
    )
    
    
    (166
    )Other assets
    
    
    
    
    
    
    (746
    )Accounts payable and accrued liabilities
    
    
    (12,330
    )
    
    
    (895
    )Long-term obligations
    
    
    (774
    )
    
    
    (106
    )Deferred collaboration revenue
    
    
    (3,485
    )
    
    
    Cash used in operating activities
    
    
    (23,130
    )
    
    
    (9,236
    )FINANCING ACTIVITIESProceeds from issuance of common stock under stock option and employee purchase plans
    
    
    674
    
    
    
    67Issuance of common shares, net of share issue costs
    
    
    
    
    
    
    9,303Cash provided by financing activities
    
    
    674
    
    
    
    9,370INVESTING ACTIVITIESPurchase of investments
    
    
    (40,086
    )
    
    
    (3,933
    )Proceeds from sale of investments
    
    
    12,302
    
    
    
    6,280Purchase of property and equipment
    
    
    (37
    )
    
    
    (15
    )Cash provided (used in) by investing activities
    
    
    (27,821
    )
    
    
    2,332Effect of exchange rate changes on cash and cash equivalents
    
    
    7
    
    
    
    (31
    )Decrease in cash and cash equivalents during the period
    
    
    (50,270
    )
    
    
    2,435Cash and cash equivalents, beginning of the period
    
    
    62,051
    
    
    
    7,618Cash and cash equivalents, end of the period
    
    
    11,781
    
    
    
    10,053Supplemental cash flow informationProperty and equipment acquired under lease obligation
    
    
    
    
    
    
    65
   5




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OncoGenex Pharmaceuticals, Inc.
 
 Notes to Consolidated Financial Statements
 (Unaudited)
 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
    2. ACCOUNTING POLICIES
 Recently Adopted Accounting Policies
  Recent Accounting Pronouncements
   6




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Reclassifications
  3. COLLABORATION AGREEMENT
    
    
    a phase 3 clinical trial of the Licensed Product, referred to as The Prostate Cancer
Saturn Study (the SATURN trial), for second-line castrate resistant prostate cancer,
initiated in the second quarter of 2010. The Company will have primary responsibility for
the oversight of this trial;
    
    a phase 3 clinical trial of the Licensed Product, referred to as the SYNERGY trial, for
first-line castrate resistant prostate cancer, initiated in the third quarter of 2010.
Teva will have primary responsibility for the oversight of this trial; and
    
    a phase 3 clinical trial of the Licensed Product for first-line non-small cell lung
cancer (NSCLC), expected to initiate in 2011. Teva will have primary responsibility for
the oversight of this trial.
  
    
    the Company will be required to spend $30 million in direct and indirect development
costs, and
    
    Teva will fund all other expenses under the Clinical Development Plan.
  7




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4. 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.
     8




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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
  (in thousands)
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMarketable SecuritiesCash
    
    $
    3,683
    
    
    $
    
    
    
    $
    
    
    
    $
    3,683Money market securities
    
    
    6,029
    
    
    
    
    
    
    
    
    
    
    
    6,029U.S. government securities
    
    
    9,198
    
    
    
    
    
    
    
    
    
    
    
    9,198U.S. agency securities
    
    
    
    
    
    
    1,424
    
    
    
    
    
    
    
    1,424Corporate bonds and commercial paper
    
    
    
    
    
    
    22,235
    
    
    
    
    
    
    
    22,235$
    18,910
    
    
    $
    23,659
    
    
    $
    
    
    
    $
    42,569
  9




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Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Estimated(in thousands)
    
    Cost
    
    
    Gain
    
    
    Loss
    
    
    Fair ValueCash
    
    $
    3,683
    
    
    $
    
    
    
    $
    
    
    
    $
    3,683Money market securities
    
    
    5,527
    
    
    
    
    
    
    
    
    
    
    
    5,527Corporate bonds and
commercial paper
    
    
    2,572
    
    
    
    
    
    
    
    1
    
    
    
    2,571Cash and cash equivalents
    
    $
    11,782
    
    
    $
    
    
    
    $
    1
    
    
    $
    11,781Money market securities
    
    
    502
    
    
    
    
    
    
    
    
    
    
    
    502Restricted cash
    
    $
    502
    
    
    $
    
    
    
    $
    
    
    
    $
    502U.S. government securities
    
    
    9,197
    
    
    
    1
    
    
    
    
    
    
    
    9,198U.S. agency securities
    
    
    1,424
    
    
    
    
    
    
    
    
    
    
    
    1,424Corporate bonds and
commercial paper
    
    
    19,664
    
    
    
    2
    
    
    
    2
    
    
    
    19,664Short-term investments
    
    $
    30,285
    
    
    $
    3
    
    
    $
    2
    
    
    $
    30,286
    5. SHAREHOLDERS EQUITY
 [a] Authorized
  [b] Issued and Outstanding Shares
   10




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[c] Stock options
 2010 Performance Incentive Plan
  Stock Option Summary
   Numberof
    
    
    WeightedOptioned
    
    
    AverageCommon
    
    
    ExerciseShares
    
    
    Price#
    
    
    $Balance, December 31, 2009
    
    
    802,871
    
    
    
    6.95Option grants
    
    
    39,422
    
    
    
    15.52Option expirations
    
    
    (7,311
    )
    
    
    104.91Option exercises
    
    
    (156,472
    )
    
    
    4.31Option forfeitures
    
    
    (26,563
    )
    
    
    7.35Balance, September 30, 2010
    
    
    651,947
    
    
    
    6.99
  Nine months endedSeptember 30,2010
    
    
    2009Risk-free interest rates
    
    
    2.36
    %
    
    
    1.68
    %Expected dividend yield
    
    
    0
    %
    
    
    0
    %Expected life
    
    
    6
    years
    
    
    4
    yearsExpected volatility
    
    
    75
    %
    
    
    76
    %
  11




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Three Months Ended
    
    
    Nine months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)
    
    $
    
    
    $
    
    
    $
    
    
    $Research and development
    
    
    88
    
    
    
    22
    
    
    
    231
    
    
    
    67General and administrative
    
    
    61
    
    
    
    95
    
    
    
    231
    
    
    
    223Total share-based compensation
    
    
    149
    
    
    
    117
    
    
    
    462
    
    
    
    290
   [d] Stock Warrants
  6. RESTRUCTURING ACTIVITIES
   12




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RemainingRemaining
    
    
    Amortization
    
    
    Additional
    
    
    LiabilityLiability at
    
    
    of excess
    
    
    Liability
    
    
    at September(In thousands)
    
    December 31, 2009
    
    
    lease facility
    
    
    Recorded
    
    
    30, 2010Current portion
of excess lease
facility
    
    $
    1,297
    
    
    $
    117
    
    
    $
    146
    
    
    $
    1,326Long-term
portion of
excess lease
facility
    
    $
    3,348
    
    
    $
    762
    
    
    $
    3,892
    
    
    $
    6,478Total
    
    $
    4,645
    
    
    $
    879
    
    
    $
    4,038
    
    
    $
    7,804
 7. COMMITMENTS AND CONTINGENCIES
 Teva Pharmaceutical Industries Ltd.
    Isis Pharmaceuticals Inc. and University of British Columbia
   13




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Bayer HealthCare LLC
    14




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Lease Arrangements
   2010
    
    $
    462011
    
    
    46Total
    
    $
    92
   2010
    
    $
    4992011
    
    
    2,0552012
    
    
    2,1172013
    
    
    2,1802014
    
    
    2,245Remainder
    
    
    7,150Total
    
    $
    16,246
  Guarantees and Indemnifications
     15




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8. COMPREHENSIVE INCOME (LOSS)
 Three Months Ended
    
    
    Nine months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)
    
    $
    
    
    $
    
    
    $
    
    
    $Income (loss) for the period
    
    
    6,894
    
    
    
    2,385
    
    
    
    9,784
    
    
    
    9,357Unrealized gain on cash equivalents and marketable securities
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    Unrealized loss on cash equivalents and marketable securities
    
    
    3
    
    
    
    2
    
    
    
    3
    
    
    
    2Comprehensive income (loss)
    
    
    6,894
    
    
    
    2,383
    
    
    
    9,784
    
    
    
    9,355
 9. SUBSEQUENT EVENTS
  Public Offering
   Therapeutic Discovery Research Grants
   16




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 INFORMATION REGARDING 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 partners;
    
    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; and
    
    market acceptance of our products and the estimated potential size of these markets.
  
    
    uncertainty relating to the timing 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;
    
    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;
  17




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
    
    our dependence on key employees;
    
    proper management of our operations;
    
    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 impact 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.
   MD&A Overview
  
    
    an overview of our business;
    
    results of operations and why those results are different
from the comparative period in the prior year; and
    
    our current capital resources, capital requirements and
possible sources of additional funding for future capital
requirements.
 Overview of the Company
    18




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Product Candidate Custirsen
   
    
    a phase 3 registration trial, referred to as the SYNERGY trial, to be conducted in
approximately 125 cancer centers evaluating a survival benefit for custirsen in
combination with first-line docetaxel treatment in approximately 800 men with CRPC,
initiated in the third quarter of 2010;
    
    a phase 3 registration trial, referred to as The Prostate Cancer Saturn Trial (the
SATURN trial), evaluating a durable pain palliation benefit for custirsen in combination
with docetaxel as second-line chemotherapy in approximately 300 men with CRPC, initiated
in the second quarter of 2010; and
    
    a phase 3 registration trial evaluating a survival benefit for custirsen in combination
with first-line chemotherapy in at least 700 patients with NSCLC, expected to initiate in
2011.
 Teva
Pharmaceutical Industries Ltd.
    
    
    a randomized phase 2 trial evaluating the benefit of combining custirsen with
first-line docetaxel chemotherapy, 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 of which 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 Summary of Final Results of custirsen Phase 2
Clinical Trial in First-Line Hormone Refractory Prostate Cancer. Due to the results of the
phase 2 trial, one of the phase 3 registration trials, 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; and
  19




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
    
    durable pain palliation, defined as pain palliation of 12 weeks or greater, has been
observed in another phase 2 trial evaluating patients with metastatic CRPC who progressed
while receiving, or within 6 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, 46% had durable
pain palliation. This is favorable even when compared to the 35% pain responses of 3 weeks
or greater observed in the phase 3 trial which supported the registration of docetaxel as
first-line chemotherapy in patients with CRPC. Due to the results of our phase 2 trial,
one of the phase 3 registration trials, the Prostate Cancer 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 chemotherapy. The SATURN trial
will enroll men in approximately 50 cancer centers who have previously responded to
first-line docetaxel therapy, but subsequently experience disease progression involving
prostate cancer-related pain despite opioid usage.
  Product Candidate OGX-427
      20




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21




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Product Candidates OGX-225, SN2310 and CSP-9222
   Collaboration Revenue
  Research and Development Expenses
    22




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General and Administrative Expenses
  Restructuring Activities
    23




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Results of Operations
 Three Months Ended September 30, 2010 Compared to the Three Months Ended September 30, 2009
       Nine months Ended September 30, 2010 Compared to the Nine months Ended September 30, 2009
   24




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Liquidity and Capital Resources
   25




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Cash Flows
 Cash Used in Operations
  Cash Provided by Financing Activities
   26




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Cash Used/Provided by Investing Activities
  Operating Capital and Capital Expenditure Requirements
  
    
    completing the SATURN trial, a phase 3 clinical trial evaluating a durable pain
palliation benefit for custirsen in combination with docetaxel as second-line
chemotherapy in approximately 300 men with CRPC, which was initiated in the second
quarter of 2010;
    
    completing the SYNERGY trial, a phase 3 clinical trial evaluating a survival benefit
for custirsen in combination with docetaxel as first-line chemotherapy in approximately
800 men with CRPC, which was initiated in the third quarter of 2010;
    
    completing a phase 3 clinical trial evaluating a survival benefit for custirsen in
approximately 700 patients with advanced, unresectable NSCLC, expected to initiate in
2011;
    
    completing follow-up monitoring visits related to our completed phase 2 clinical
trials of custirsen;
    
    completing follow-up monitoring visits related to the phase 1 clinical trial
evaluating OGX-427 as a monotherapy in patients with solid tumors and continuing
evaluation of OGX-427 in combination with docetaxel in patients with solid tumors;
    
    completing an investigator-sponsored phase 1 clinical trial evaluating OGX-427
treatment in patient with bladder cancer;
    
    completing an investigator-sponsored phase 2 clinical trial evaluating OGX-427
treatment in patients with prostate cancer;
    
    completing a phase 2 clinical trial evaluating OGX-427 in combination with standard
first-line chemotherapy in approximately 180 patients with metastatic
bladder cancer;
    
    continuing partnering discussions with respect to OGX-427 and assessing opportunities
to expand OGX-427 development plan into additional randomized phase 2 trials; and
    
    meeting working capital needs, capital expenditures and general corporate purposes.
    27




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
    
    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 clinical trials, preclinical development and regulatory
approvals;
    
    timing, cost, and results of drug discovery and research and development;
    
    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 securities or debt financings; and
    
    costs related to obtaining, defending and enforcing patents.
 Off-Balance Sheet Arrangements
  Inflation
  Contingencies and Commitments
  Material Changes in Financial Condition
 September 30,
    
    
    December 31,2010
    
    
    2009(In thousands)
    
    $
    
    
    $Total assets
    
    
    47,773
    
    
    
    68,980Total liabilities
    
    
    33,470
    
    
    
    46,021Shareholders equity
    
    
    14,303
    
    
    
    22,959
  28




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Critical Accounting Policies and Estimates
  New Accounting Standards
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Interest Rate Risk
  Foreign Currency Exchange Risk
   29




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Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
   30




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
   
 Item 6. Exhibits
 
 SIGNATURES
  ONCOGENEX PHARMACEUTICALS, INC.Date:   November 4, 2010
    By:
    /s/ Cameron LawrenceCameron LawrencePrincipal Financial Officer
(Principal Financial and Accounting Officer)  31




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ExhibitNumber
    
    Description2.1
    
    
    Arrangement Agreement between the Company and OncoGenex
Technologies Inc. dated May 27, 2008 (Incorporated by
reference to the Companys proxy statement on Schedule 14A
filed on July 3, 2008.)2.2
    
    
    First Amendment to Arrangement Agreement between the
Company and OncoGenex Technologies Inc. dated August 11,
2008 (Incorporated by reference to the Companys quarterly
report on Form 10-Q for the quarter ended September 30,
2008.)2.3
    
    
    Second Amendment to Arrangement Agreement between the
Company and OncoGenex Technologies Inc. dated August 15,
2008 (Incorporated by reference to the Companys quarterly
report on Form 10-Q for the quarter ended September 30,
2008.)3.1
    
    
    Amended and Restated Certificate of Incorporation (As
Amended Through October 17, 1995) (Incorporated by
reference to the Companys Registration Statement on Form
S-1, Reg. No. 33-96112.)3.2
    
    
    Certificate of Amendment to Certificate of Incorporation
filed on May 6, 1999 (Incorporated by reference to
Companys quarterly report on Form 10-Q for the quarter
ended March 31, 1999.)3.3
    
    
    Certificate of Correction filed on March 9, 2009 to
Certificate of Amendment filed on May 6, 1999
(Incorporated by reference to the Companys current report
on Form 8-K filed on March 11, 2009.)3.4
    
    
    Certificate of Amendment to Certificate of Incorporation
filed on May 7, 2004 (Incorporated by reference to the
Companys annual report on Form 10-K for the year ended
December 31, 2008.)3.5
    
    
    Certificate of Correction filed on March 9, 2009 to
Certificate of Amendment filed on May 7, 2004
(Incorporated by reference to the Companys current report
on Form 8-K filed on March 11, 2009.)3.6
    
    
    Certificate of Amendment to Certificate of Incorporation
of Sonus Pharmaceuticals Inc., effective August 20, 2008
(Incorporated by reference to the Companys quarterly
report on Form 10-Q for the quarter ended September 30,
2008.)3.7
    
    

Certificate
of Amendment to Certificate of Incorporation filed on June 8,
2010 (Incorporated by reference to the Companys current report
on Form 8-K filed on June 14, 2010.)3.8
    
    

Fourth Amended and Restated Bylaws of Oncogenex
Pharmaceuticals, Inc. (Incorporated by reference to the
Companys current report on Form 8-K filed on June 14,
2010.)4.1
    
    
    Specimen Certificate of Common Stock (Incorporated by
reference to the Companys quarterly report on Form 10-Q
for the quarter ended September 30, 2008.)4.2
    
    
    Amended and Restated Rights Agreement dated as of July 24,
2002 between Sonus Pharmaceuticals Inc. and U.S. Stock
Transfer Corporation (Incorporated by reference to the
Companys amended Form 8-A filed on July 25, 2002.)4.3
    
    
    First Amendment to Amended and Restated Rights Agreement
dated as of October 17, 2005 between Sonus Pharmaceuticals
Inc. and U.S. Stock Transfer Corporation (Incorporated by
reference to the Companys amended Form 8-A filed on
October 18, 2005.)




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ExhibitNumber
    
    Description4.4
    
    
    Second Amendment to Amended and Restated Rights Agreement
dated as of August 10, 2006 between Sonus Pharmaceuticals
Inc. and U.S. Stock Transfer Corporation (Incorporated by
reference to the Companys amended Form 8-A filed on
August 14, 2006.)4.5
    
    
    Third Amendment to Amended and Restated Rights Agreement
dated May 27, 2008 between Sonus Pharmaceuticals Inc. and
Computershare Trust Company, N.A. (Incorporated by
reference to the Companys current report on Form 8-K
filed on May 30, 2008.)4.6
    
    
    Form of Warrant to Purchase Common Stock (Incorporated by reference
to the companys current report on Form 8-K filed on
October 19, 2010.)10.1
    
    
    Sonus Pharmaceuticals, Inc. Incentive Stock Option,
Nonqualified Stock Option and Restricted Stock Purchase
Plan  1991 (the 1991 Plan), as amended (Incorporated by
reference to the Companys Registration Statement on Form
S-1, Reg. No. 33-96112.)10.2
    
    
    Form of Incentive Option Agreement (pertaining to the 1991
Plan) (Incorporated by reference to the Companys
Registration Statement on Form S-1, Reg. No. 33-96112.)10.3
    
    
    Form of Sonus Pharmaceuticals, Inc. Nonqualified Stock
Option Agreement under the 1991 Plan (Incorporated by
reference to the Companys Registration Statement on Form
S-1, Reg. No. 33-96112.)10.4
    
    
    Sonus Pharmaceuticals, Inc. 1999 Nonqualified Stock
Incentive Plan (the 1999 Plan) (Incorporated by
reference to Companys quarterly report on Form 10-Q for
the quarter ended March 31, 1999.)10.5
    
    
    Form of Sonus Pharmaceuticals, Inc. Nonqualified Stock
Option Agreement under the 1999 Plan (Incorporated by
reference to Companys quarterly report on Form 10-Q for
the quarter ended March 31, 1999.)10.6
    
    
    Form of Sonus Pharmaceuticals, Inc. Restricted Stock
Purchase Agreement under the 1999 Plan (Incorporated by
reference to Companys quarterly report on Form 10-Q for
the quarter ended March 31, 1999.)10.7
    
    
    Sonus Pharmaceuticals, Inc. 2000 Stock Incentive Plan (the
2000 Plan) (Incorporated by reference to the Companys
quarterly report on Form 10-Q for the quarter ended
June 30, 2000.)10.8
    
    
    First Amendment to Sonus Pharmaceuticals, Inc. 2000 Plan
(Incorporated by reference to the Companys quarterly
report on Form 10-Q for the quarter ended September 30,
2006.)




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##### Table of Contents



ExhibitNumber
    
    Description10.9
    
    
    Form of Sonus Pharmaceuticals, Inc. Stock Option Agreement
(pertaining to the 2000 Plan) (Incorporated by reference
to the Companys quarterly report on Form 10-Q for the
quarter ended June 30, 2000.)10.10
    
    
    Sonus Pharmaceuticals, Inc. 2007 Performance Incentive
Plan (the 2007 Plan) (Incorporated by reference to the
Companys proxy statement on Schedule 14A filed on
April 3, 2007.)10.11
    
    
    Form of Sonus Pharmaceuticals, Inc. Stock Option Agreement
(pertaining to the 2007 Plan) (Incorporated by reference
to the Companys quarterly report on Form 10-Q for the
quarter ended September 30, 2007.)10.12
    
    
    Form of Sonus Pharmaceuticals, Inc. Restricted Stock
Purchase Agreement under the 2007 Plan (Incorporated by
reference to the Companys quarterly report on Form 10-Q
for the quarter ended September 30, 2007.)10.13
    
    

OncoGenex
Pharmaceuticals, Inc. 2010 Performance Inactive Plan (2010
Plan) (Incorporated by reference to the Companys proxy
statement on Schedule 14A filed on
April 19, 2010.)10.14
    
    

Form
of OncoGenex Pharmaceuticals, Inc. 2010 Stock Option Agreement under
the 2010 Plan (Incorporated by reference to the Companys
current report on Form 8-K filed on June 14, 2010.)10.15
    
    

Form
of OncoGenex Pharmaceuticals, Inc. 2010 Restricted Stock Purchase Agreement under
the 2010 Plan (Incorporated by reference to the Companys
current report on Form 8-K filed on June 14, 2010.)10.16
    
    
    OncoGenex Technologies Inc. Amended and Restated Stock
Option Plan (Incorporated by reference to the OncoGenex
Technologies Inc. registration statement on Form F-1 filed
on December 13, 2006.)10.17
    
    
    Stock Option Assumption, Amending and Confirmation
Agreement dated as of August 21, 2008 between the Company
and OncoGenex Technologies Inc. (Incorporated by reference
to the Companys registration statement on Form S-8 filed
on August 26, 2008.)10.18
    
    
    OncoGenex Pharmaceuticals, Inc. Short Term Incentive
Awards Program (Incorporated by reference to the Companys
current report on Form 8-K filed on June 14, 2010.)10.19
    
    
    Agreement and Consent Form (related to the Short Term
Incentive Awards Program) (Incorporated by reference to
the Companys current report on Form 8-K filed on April 2,
2009.)10.20
    
    
    Form of Indemnification Agreement for Officers and
Directors of the Company (Incorporated by reference to the
Companys Registration Statement on Form S-1, Reg.
No. 33-96112.)10.21
    
    
    Form of Indemnification Agreement between OncoGenex
Technologies Inc. and each of Scott Cormack and Cindy Jacobs (Incorporated by reference to
the OncoGenex Technologies Inc. registration statement on
Form F-1 filed on December 13, 2006.)10.22
    
    
    Form of Indemnification Agreement between OncoGenex
Technologies Inc. and Neil Clendeninn (Incorporated by
reference to the OncoGenex Technologies Inc. registration
statement on Form F-1 filed on December 13, 2006.)




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ExhibitNumber
    
    Description10.23
    
    
    Employment Agreement between OncoGenex Technologies Inc.
and the Company and Scott Cormack dated as of November 4,
2009 (Incorporated by reference to the Companys quarterly
report on Form 10-Q for the quarter ended September 30,
2009.)10.24
    
    
    Employment Agreement between OncoGenex Technologies Inc.
and the Company and Stephen Anderson dated as of
November 4, 2009 (Incorporated by reference to the
Companys quarterly report on Form 10-Q for the quarter
ended September 30, 2009.)10.25
    
    
    Amendment dated February 24, 2010 to the Employment
Agreement between OncoGenex Technologies Inc. and Stephen
Anderson (Incorporated by reference to the Companys
current report on Form 8-K filed February 25, 2010.)10.26
    
    
    Employment Agreement between the Company and Cindy Jacobs
dated as of November 3, 2009 (Incorporated by reference to
the Companys quarterly report on Form 10-Q for the
quarter ended September 30, 2009.)10.27
    
    
    Employment Agreement dated October 14, 2008 between
OncoGenex Technologies Inc. and Cameron Lawrence
(Incorporated by reference to the Companys current report
on Form 8-K filed March 1, 2010.)10.28
    
    
    Employment Amending Agreement dated January 1, 2009
between OncoGenex Technologies Inc. and Cameron Lawrence
(Incorporated by reference to the Companys current report
on Form 8-K filed March 1, 2010.)10.29
    
    
    Lease by and between BMR-217th Place LLC and
the Company dated as of November 21, 2006 (Incorporated by
reference to the Companys annual report on Form 10-K for
the year ended December 31, 2006.)10.30
    
    
    First Amendment to Lease by and between
BMR-217th Place LLC and the Company dated as of
August 17, 2007 (Incorporated by reference to the
Companys annual report on Form 10-K for the year ended
December 31, 2007.)10.31
    
    
    Second Amendment to Lease by and between
BMR-217th Place LLC and the Company dated as of
January 28, 2008 (Incorporated by reference to the
Companys quarterly report on Form 10-Q for the quarter
ended March 31, 2008.)




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ExhibitNumber
    
    Description10.38
    
    
    Amended and Restated License Agreement effective as of
July 2, 2008 by and between OncoGenex Technologies Inc.
and Isis Pharmaceuticals, Inc. (OGX-011)* (Incorporated by
reference to the Companys annual report on Form 10-K for
the year ended December 31, 2008.)10.39
    
    
    Letter Agreement Regarding Certain Sublicense
Consideration for OGX-011 between OncoGenex Technologies
Inc. and Isis Pharmaceuticals, Inc. dated December 18,
2009 (Incorporated by reference to the Companys annual
report on Form 10-K for the year ended December 31, 2009.)10.40
    
    
    Amendment No. 1 to Amended and Restated License Agreement
between OncoGenex Technologies Inc. and Isis
Pharmaceuticals, Inc. dated December 19, 2009 (OGX-011)*
(Incorporated by reference to the Companys annual report
on Form 10-K for the year ended December 31, 2009.)10.41
    
    
    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)* (Incorporated by reference to
the OncoGenex Technologies Inc. registration statement on
Form F-1, Amendment No. 1, filed on January 29, 2007.)10.42
    
    
    Second Amending Agreement and Consent as of August 7, 2008
between the University of British Columbia and OncoGenex
Technologies Inc. (OGX-011) (Incorporated by reference to
the Companys quarterly report on Form 10-Q for the
quarter ended September 30, 2008.)10.43
    
    
    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)*
(Incorporated by reference to the Companys annual report
on Form 10-K for the year ended December 31, 2009.)10.44
    
    
    Collaboration and License Agreement between OncoGenex
Technologies Inc. and Isis Pharmaceuticals, Inc. effective
as of January 5, 2005 (OGX-427)* (Incorporated by
reference to the OncoGenex Technologies Inc. registration
statement on Form F-1, Amendment No. 1, filed on
January 29, 2007.)10.45
    
    
    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)* (Incorporated by reference to
the OncoGenex Technologies Inc. registration statement on
Form F-1, Amendment No. 1, filed on January 29, 2007.)10.46
    
    
    Second Amending Agreement as of August 7, 2008 between the
University of British Columbia and OncoGenex Technologies
Inc. (OGX-427) (Incorporated by reference to the Companys
quarterly report on Form 10-Q for the quarter ended
September 30, 2008.)10.47
    
    
    Collaboration and License Agreement between OncoGenex
Technologies Inc. and Teva Pharmaceutical Industries Ltd.
dated as of December 20, 2009 (OGX-011)* (Incorporated by
reference to the Companys annual report on Form 10-K for
the year ended December 31, 2009.)




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ExhibitNumber
    
    Description31.1
    
    
    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 200232.2
    
    
    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. Registrant will furnish supplementally a copy of any omitted schedule or similar attachment to the SEC upon request.*
    
    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.