Double Trouble Sinks Oncomed As Investors Look to Earlier Assets

April 10, 2017 Double trouble sinks Oncomed as investors look to earlier assets

Jonathan Gardner

Oncomed looks like it has fewer strategic options after the twin setbacks of a phase II pancreatic cancer failure for demcizumab and its partner Bayer’s decision to opt out of a licensing deal for two other projects.

Shares fell 36% to $5.65 yesterday in spite of the group’s efforts to put the two disappointments in a positive light – Celgene-partnered partnered demcizumab might be a viable candidate in first-line lung cancer, while Bayer’s decision means Oncomed still has full ownership of two phase II-ready cancer agents, executives said. Nevertheless, they said a portfolio review was underway, highlighting early-stage biomarker-driven projects with potential benefit in immuno-oncology.

Testing times

Two near-term catalysts should determine whether Oncomed matures into a late-stage developer or if it must turn back to a focus on phase I assets: readouts of the Denali phase II clinical trial of demcizumab in NSCLC and the Pinnacle phase I/II trial of tarextumab in small-cell lung cancer.

Denali tests demcizumab, an anti-DLL4 antibody, in first-line non-squamous NSCLC in combination with carboplatin and pemetrexed against the two chemotherapy agents. It was initiated in late 2014, before the anti-PD-1 drug Keytruda reshaped first-line NCSLC treatment, and thus it will likely take additional mid-stage trials before a clear idea emerges of where it might fit into treatment protocols.

Oncomed executives are aware of this, saying on a conference call with investors yesterday that when Denali results are released they will also unblind data from a phase I trial of demcizumab in combination with Keytruda in solid tumours.

Still, demcizumab's failure in first-line pancreatic cancer in the Yosemite trial will do little to build confidence in lung cancer. In Yosemite, demcizumab was paired with Celgene’s Abraxane and gemcitabine against those two established agents. The two demcizumab dosing arms failed to show any benefit on progression-free survival, the primary endpoint, and could not match the standard of care on overall response rate.

Two-stage Pinnacle, meanwhile, tests tarextumab in combination with etoposide and platinum therapy to determine a maximum tolerated dose, followed by a second-stage in which the combination will be tested against tarextumab monotherapy. Untreated patients with extensive stage SCLC have been selected.

The omens are not good: the drug, an anti-notch 2/3 antibody, also failed in pancreatic cancer early last year (OncoMed digs itself out from under Alpine avalanche, January 26, 2016).

Bayer backs out

Bayer’s decision affects two clinical-stage assets, the Wnt inhibition agents vantictumab and ipafricept, and Oncomed chalked it up to strategic decision-making by the German partner. A collaboration on small-molecule projects is still in place.

Executives said the $90m in fees Bayer had paid Oncomed had fully funded development of the two candidates until the end of phase I. However, the company will “park” both in the hope that another partner will emerge – the belief is that immuno-oncology players will be interested in testing combinations.

Given Bayer's decision, executives said that after upcoming data readouts they would review the pipeline and analyse which agents to move into the clinic. Patients are being enrolled into phase I trials of the anti- DLL/VEGF bispecific antibody navicixizumab (OMP-305B83) in second-line colorectal and ovarian cancers, and an anti-Notch1 project, brontictuzumab (OMP-52M51), in third-line colorectal cancer.

The company also filed a US IND for an anti-Tigit antibody coded OMP-313M32 on which preclinical data were presented at the AACR meeting.

Oncomed ended 2016 with $185m and expects to burn less than $100m this year, extending its runway to the third quarter of 2018 assuming no partnering milestones are paid.

After the setbacks Leerink's Michael Schmidt set a price target of $6, valuing the company’s cash at $2 and the early-stage immuno-oncology assets targeting Tigit and GITR at $4 – giving no credit to the phase II projects. It is hard to see this picture changing unless Denali and Pinnacle provide positive surprises.

Project Study Trial ID

demcizumab Yosemite NCT02289898

Denali NCT02259582

tarextumab Pinnacle NCT01859741

To contact the writer of this story email Jonathan Gardner in Virginia at [email protected] or follow @ByJonGardner on Twitter