OncoMed (OMED): Perseverance in the Cancer Battle

Edward Kim  |

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:

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.

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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