Why OncoMed’s Update Could Crater the Stock

By Chris Lange Updated Jan 13, 2:38PM EST · Published Jan 25, 9:15AM EST

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Why OncoMed’s Update Could Crater the Stock — © Thinkstock

OncoMed Pharmaceuticals Inc. (NASDAQ: OMED) saw its stock sink early Monday morning following an update from its Phase 2 Alpine study. The company announced an update following a pre-planned January 23 interim efficacy assessment of the clinical trial by an independent data safety monitoring board (DSMB).

OncoMed is a clinical-stage company focused on discovering and developing novel anti-cancer stem cell and immuno-oncology therapeutics. OncoMed has seven anti-cancer product candidates in clinical development.

Overall from a safety standpoint, the DSMB recommended that the study proceed to completion without modification and no unexpected safety findings emerged from its review. However, the DSMB informed OncoMed of a couple findings regarding futility of the trial:

A statistically significant worsening of response rate and progression-free survival (PFS) in the treatment arm in the overall intent-to-treat population, as well as a negative trend in each Notch biomarker subgroup.

A strong trend to lack of benefit in the treatment arm for overall survival (OS), regardless of Notch biomarker levels, suggesting a low probability of achieving a statistically significant OS benefit based on analyses reviewed by the DSMB.

As a result, OncoMed is taking steps to assess the current results and decide where to take this trial. Basically, the DSMB does not see a real future for tarextumab in this application. So either the company must find a new designation or this trial might be over for good.
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Paul J. Hastings, chairman and CEO of OncoMed, commented on the update:

The findings communicated by the DSMB suggest a low likelihood of a statistically significant benefit in overall survival in the tarextumab ALPINE pancreatic cancer trial. Our aim is to quickly unblind the trial and work with our clinical sites and investigators to verify, analyze, interpret, and fully understand the data, including Notch biomarker subgroup trends, and determine next steps.

So far in 2016, OncoMed has underperformed the market, with the stock down 22% year to date. There is an identical number for its performance over the past 52 weeks.

Shares of OncoMed closed Friday up 3.8% at $17.57, with a consensus analyst price target of $34.50 and a 52-week trading range of $13.33 to $29.83. Following the update, the stock was down 38% at $10.90 in early trading indications Monday.

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.