OncoGenex Pharmaceuticals said today it terminated a five-year-old collaboration with Teva Pharmaceutical Industries and regained rights to custirsen, a Phase III compound under study for prostate and lung cancers—eight months after the drug candidate failed a Phase III trial in combination with docetaxel.

In the termination agreement announced today, Teva agreed to pay OncoGenex $27 million, “subject to certain adjustments,” as called for under the companies’ 2009 collaboration agreement. The agreement gave Teva rights to custirsen in return for agreeing to pay OncoGenex up to $430 million—$60 million in upfront, equity investment and development-cost payments; the rest in payments tied to regulatory and sales milestones. Those numbers do not include additional tiered royalties, with the royalty percentage ranging from the mid-teens to the mid-twenties, depending upon the amount of net sales.

Now, OncoGenex will take over responsibility for all custirsen related expenses, from manufacturing and regulatory activities now managed by Teva, to costs related to another Phase III trial involving the drug candidate.

The Phase III ENSPIRIT trial is an international, randomized, open-label trial designed to evaluate a survival benefit for custirsen in the treatment of advanced or metastatic non-small cell lung cancer in 1,100 patients who have progressed after initial chemotherapy treatment. Patients are randomized to receive custirsen plus docetaxel or docetaxel alone, with enrollment initiated by Teva in September 2012.

In a statement, OncoGenex said it expects that the $27 million from Teva and current resources should enable completion of the AFFINITY trial through data readout in late 2015/early 2016; continuation of the ENSPIRIT trial through the second interim futility analysis expected in the first half of 2015; and achievement of key clinical milestones for another drug candidate.

That candidate, Apatorsen (OGX-427), is a Phase II once-weekly intravenous (IV) treatment designed to inhibit production of Heat shock protein 27, with the goal of disabling cancer cells’ defenses and overcome treatment resistance. The clinical milestones anticipated for Apatorsen, according to OncoGenex, include completion of patient enrollment in the Borealis-2™ trial, and final data from the Spruce™ and Rainier™ clinical trials.

If ENSPIRIT passes its second interim futility analysis, it would enable the trial to continue with a smaller enrollment requirement, increased confidence in success and shorter time to regulatory submission, Scott Cormack, OncoGenex’s president and CEO, said in a statement.

Cormack cited Teva’s retreat from oncology as a core therapeutic area, announced by the company on October 6. The company spelled out two core areas central nervous system (including multiple sclerosis, neurodegenerative diseases, and pain) and respiratory (including asthma and chronic obstructive pulmonary disease), while also retreating from women’s health treatments.

“Teva's strategic focus has shifted away from oncology research and development. However, OncoGenex remains committed to the continued investigation of custirsen, particularly in patients who have advancing disease despite previous treatments,” Cormack stated.

Yet Teva did not rule out a presence in oncology drug development in its announcement, stating: “the Company will focus on market-ready or close-to-market assets to maximize sustainable profitability. In addition, Teva will continue to evaluate opportunities for commercially-oriented activities and collaborations.”

Custirsen is designed to block the production of the protein clusterin, which according to OncoGenex may play a fundamental role in cancer cell survival and treatment resistance. Clusterin is upregulated in tumor cells in response to treatment interventions such as chemotherapy, hormone ablation and radiation therapy and has been found to be overexpressed in a number of cancers, including prostate, lung, breast, and bladder.

On April 28, OncoGenex disclosed that the custirsen-docetaxel combo did not meet the primary endpoint of a statistically significant improvement in overall survival in men with metastatic castrate-resistant prostate cancer (CRPC), compared to docetaxel/prednisone alone. The combination produced a median overall survival of 23.4 months, vs. 22.2 months for docetaxel/prednisone alone in the Phase III SYNERGY trial—in which custirsen was administered to approximately 500 men with metastatic CRPC.

“Although the SYNERGY study did not meet its primary endpoint of significantly improved overall survival (OS) in combination with first-line docetaxel, exploratory analyses showed improved OS for some men who received custirsen and who had poor prognostic scores across several risk factors, including performance status ≤ 80,” OncoGenex said.