OncoMed sinks as cancer drug fails; Bayer opts against licensing drugs

OncoMed Pharmaceuticals Inc said it would discontinue a trial testing experimental stem cell therapy demcizumab as an initial treatment for advanced pancreatic cancer, after the addition of the drug to standard-of-care failed a mid-stage study.

OncoMed's shares plummeted after it also said that Germany's Bayer AG had decided to not exercise an option to license two of the U.S. company's other experimental therapies, vantictumab and ipafricept, for "strategic reasons."

The stock, which fell as much as 43.6 percent to a record low of $4.94, was the biggest percentage loser on the Nasdaq in afternoon trading.

OncoMed's demcizumab, Celgene Corp's Abraxane and chemotherapy versus a combination of Abraxane, chemotherapy and a placebo were tested in the pancreatic cancer trial. The main goal was to slow disease progression.

An analysis of data from the study, YOSEMITE, did not signal an overall survival benefit either, OncoMed said.

Based on the lack of benefit over standard-of-care, which performed remarkably well, the company will discontinue the trial, Chief Executive Paul Hastings said, adding that the company plans to discontinue any additional enrollment in other ongoing demcizumab trials.

This is a major setback for OncoMed and for cancer stem cell targets more broadly, which have been a difficult area of drug development, Leerink's Michael Schmidt said in a research note.

OncoMed is also testing demcizumab in combination with Merck's Keytruda as a treatment for a type of lung cancer. OncoMed has already stopped another lung cancer study testing demcizumab.

An analysis of both studies is expected to be submitted to Celgene who can opt into the program. But "given YOSEMITE results we think opt-in is unlikely," Schmidt said.

YOSEMITE failed but other potential value drivers remain, Wells Fargo analysts said in a note.

OncoMed's other experimental stem cell therapy, tarextumab, is also being evaluated as a treatment for lung cancer. Data from this mid-stage study is expected later this year, and will be submitted to partner GlaxoSmithKline Plc who can opt-into the program.

In January 2016, an independent panel of safety monitors said they had observed worsening response rates in pancreatic cancer patients taking tarextumab despite its clean safety profile.

Pancreatic cancer is the third leading cause of cancer-related deaths in the United States. Each year, nearly 54,000 cases are diagnosed, and some 43,000 succumb to the disease, according to the American Cancer Society.