OncoMed (OMED): Perseverance in the Cancer Battle

Those of you who’ve been following OncoMed Pharmaceuticals (Nasdaq: OMED) have witnessed a series of clinical trial failures this year that dramatize how precarious life can be as a young biotechnology company. Most clinical stage companies face only a handful of these binary event risks over the course of their entire existence. OncoMed, which is developing treatments for cancer, announced a lifetime’s worth of negative trial outcomes from its developmental monoclonal antibodies, demcizumab and tarextumab, in a span of just three weeks this past spring. We’re taking another look at OncoMed today to remind us of what happened and to see where the pipeline stands now.

A quick review:

  • April 10th: Top-line results from OncoMed’s Phase 2 trial of demcizumab in combination with the chemotherapy drugs Abraxane (Celgene, Nasdaq: CELG) plus gemcitabine in previously untreated patients with metastatic pancreatic cancer showed that the combination didn’t meet the primary endpoint of progression-free survival. Additionally, the Abraxane + gemcitabine + demcizumab combination didn’t show a benefit vs Abraxane + gemcitabine + placebo.
  • April 17th: The company announced that top-line results from its Phase 2 trial of tarextumab in combination with the chemotherapy drugs etoposide + either cisplatin or carboplatin in previously untreated patients with extensive-stage small cell lung cancer were undifferentiated from those of chemotherapy plus placebo, and therefore the trial did not meet its primary endpoint.
  • April 24: OncoMed cut its workforce by about 50%, reducing staff to 64 remaining full-time employees. The company said it expects to save $60 million over the next two years, leaving it with enough cash to fund operations through Q3 2019.
  • May 8th: As part of its Q1 update, the company announced that demcizumab in combination with the chemotherapy drugs carboplatin and pemetrexed in front-line non-squamous non-small cell lung cancer failed to meet its efficacy endpoints when compared to placebo, with better outcomes apparent in the placebo group. OncoMed said it was discontinuing all demcizumab trials and would conduct a complete review with Celgene, its partner in the program.

Pipeline going forward

As part of the company Q2 update earlier this month, CEO and Chairman Paul Hastings outlined the state of the pipeline. Celgene continues to be a major presence as a partner in the clinical trials going forward and a potential source of significant milestone payments.

Source: OncoMed Pharmaceuticals website

OncoMed is enrolling patients for three Phase 1 studies of different antibody candidates, both in conjunction with standard of care chemotherapies and as a single agent.

  • Navicixizumab: Enrollment continues in two Phase 1b studies of this bispecific antibody that targets both DLL4 in the Notch cancer stem cell pathway and vascular endothelial growth factor (VEGF) receptors in combination with standard of care chemotherapies: one in patients with 2nd line metastatic colorectal cancer and a second in patients with platinum-resistant ovarian, primary peritoneal or fallopian tube cancer. There’s a potential $25 million opt-in from Celgene at the end of Phase 1, with $505 million in remaining milestones
  • Rosmantuzumab: Enrollment continues in a Phase 1a/b study of OncoMed’s anti-RSPO3 antibody in patients with advanced solid tumors (Phase 1a) and in patients with previously treated metastatic colorectal or gastric cancer (Phase 1b; in combination with the chemotherapy regimen known as FOLFIRI – folinic acid, fluorouracil and irinotecan). Interim Phase 1a results demonstrated the drug was safe and well tolerated, and Celgene has a $38 million opt-in option at the end of Phase 1 and $440 million in remaining potential milestones.
  • Anti-TIGIT: Enrollment continues in a single-agent Phase 1a study of this anti-TIGIT (TIGIT is an immunoreceptor that inhibits the immune response) antibody in patients with advanced or metastatic solid tumors. Celgene has a $35 million opt-in option at the end of the Phase 1 and $440 million in remaining milestones.

OMED Stock

OMED lost 58% of its value over the course of the failed clinical announcements in April and May, and now stands at a market capitalization of just $156 million. While the trial results in the spring were obviously extremely discouraging, we find silver linings in (1) the way that Mr. Hastings and his team handled themselves after gazing long into the abyss and (2) Celgene’s continued developmental support and the attendant potential milestone payments.

OncoMed was upfront with its delivery of the bad news in the spring, not trying to bury the lede in any of their relevant press releases. We’ve noted before that we loathe press releases that attempt to diminish bad news or otherwise try to spin a negative into something it isn’t. This show of integrity and intelligence from Mr. Hastings and his team, combined with the difficult but necessary decision to cut the staff in half, demonstrates to us that the management and board of OncoMed are well-equipped to handle what can often seem like a Sisyphean task of getting a drug candidate through the gauntlet of clinical trials. We’ll be watching OncoMed closely for signs of clinical progress with its current Phase 1 compounds and for continued signs of management’s operational aptitude.

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