OncoMed's lung cancer drug fails mid-stage study, shares tumble

OncoMed Pharmaceuticals Inc's shares were jolted for a second time in a week after the company said its experimental lung cancer drug failed a mid-stage study.

The company's stock was down 22 percent in early trading. Including those losses, OncoMed's market valuation has halved since the company said last week it would discontinue a trial testing another cancer drug.

"Based on the events of today and last week, we will be undertaking a comprehensive portfolio prioritization review immediately," said Chief Executive Paul Hastings.

The company said on Monday the mid-stage trial was testing a combination of its drug, tarextumab, and chemotherapy, compared with chemotherapy and a placebo.

The main goal for Tarextumab, which the company is developing in partnership with GlaxoSmithKline Plc, was to slow the progression of the disease.

The company said the tarextumab study also failed the secondary goal of overall survival benefit.

OncoMed's management will need to focus on rebuilding the research and development pipeline in a capital-efficient manner, Leerink Partners analyst Michael Schmidt wrote in a research note.

OncoMed also said on Monday it would also discontinue enrollment in an early-stage trial testing its drug, brontictuzumab, in combination with chemotherapy in patients with colorectal cancer due to toxicity issues.

The company said last week it would discontinue a trial testing demcizumab as an initial treatment for advanced pancreatic cancer.

Dealing another blow last week, Germany's Bayer AG said it would not exercise an option to license two of OncoMed's other experimental therapies, vantictumab and ipafricept, for "strategic reasons."

OncoMed had cash and short-term investments totaling about $156.9 million as of the first quarter of 2017.

Lung cancer (both small cell and non-small cell) is the second most common cancer in men and women and is by far the leading cause of cancer death, according to the American Cancer Society.