OncoMed Shares Sink as One Drug Fails, Bayer Kicks Back Two Others

Xconomy San Francisco — 

OncoMed Pharmaceuticals got a double dose of bad news on Monday. For the second time, one of its stem cell drugs has failed to help pancreatic cancer patients. And what’s more, partner Bayer has passed on options to two of its other cancer drugs.

Redwood City, CA-based OncoMed (NASDAQ: OMED) said this morning that demcizumab, a stem cell cancer drug it has been co-developing with Celgene (NASDAQ: CELG), failed a 204 patient, Phase 2 trial in pancreatic cancer. The drug, when combined with other pancreatic cancer therapies gemcitabine and protein-bound paclitaxel (Abraxane), didn’t hold tumors in check any longer than those other drugs alone. The median progression-free survival for people in each group—the primary goal of the study—was 5.5 months, OncoMed said.

Separately, OncoMed also said that Bayer Pharma won’t exercise an option to rights to two of the company’s other drugs, vantictumab and ipafricept. OncoMed has gotten $90 million from Bayer since the two became partners in 2010, which has fully paid for development of both drugs—each in early stage testing for a variety of cancers—so far. Though the two companies will still work together on an unspecified small molecule drug program, OncoMed will now have to bear the costs of developing vantictumab and ipafricept going forward. CEO Paul Hastings said in a statement that the company will conduct a portfolio review to determine the next steps for all of OncoMed’s programs.

OncoMed develops antibody drugs that target proteins on cancer stem cells—a subset of tumor cells that can renew themselves and cause tumors to regrow despite treatment. Despite the still as of yet unrealized potential of stem cells as cancer drug targets, OncoMed was able to amass a variety of partnerships to help fund its work. Deals with Bayer and GlaxoSmithKline helped OncoMed go public and raise $82 million in July 2013, and Celgene put $177 million in cash and stock into the company as part of another wide-ranging partnership deal five months later.

Yet, like other companies developing stem cell cancer drugs such as Verastem (NASDAQ: VSTM), clinical success has been hard to come by for OncoMed. Its two most advanced therapies, tarextumab and demcizumab, have now each failed a Phase 2 trial in pancreatic cancer. Tarextumab, part of OncoMed’s deal with GSK, came up short in early 2016, though the drug is still being tested in a mid-stage trial in lung cancer, with data expected shortly.

Demcizumab, meanwhile, is one of several drugs involved in OncoMed’s deal with Celgene. The company had roughly $185 million in cash on hand at the end of 2016.

Shares of OncoMed plummeted more than 43 percent, to $4.96 apiece, in pre-market trading on Monday. The company went public at $17 per share in 2013 but hasn’t traded above its IPO price since January 2016.

OncoMed is holding a conference call this morning to discuss the news.