Does Oncomed Pharma Have Any Upside Left?

• Oncomed Pharmaceuticals Inc OMED shares are down 52 percent since July 27.
• Leerink’s Paul Matteis downgraded the rating for the company from Outperform to Market Perform, while reducing the price target from $27 to $11.
• Failure of Tarextumab raises questions regarding readthrough for other pipeline products, Matteis stated.

Oncomed Pharma has announced that the phase II study of Tarextumab in Pancreatic Cancer [PC] showed futility on an interim analysis, with a statistically significant worsening of progression free survival [PFS] and a strong trend to lack of benefit on Overall Survival [OS].

Analyst Paul Matteis wrote, “From these data, we see a minor negative readthrough onto the potential of Demcizumab & brontictuzumab, and a broader cautious readthrough onto our ability to generate positive conviction from early stage single arm combination studies.” Demcizumab and Brontictuzumab also target the Notch pathway, like tarextumab, although in a slightly different way.

The earlier positive view on Oncomed Pharma reflected benefit seen across multiple single arm studies for Tarextumab, Demcizumab and Brontictuzumab, Matteis said. He added, however, that Tarextumab’s significant trends towards improvement on Overall survival did not result in a benefit in a larger phase II study. This has dampened the confident in “the predictiveness of ph1b combination results, which also show very intriguing trends that are now being examined in larger, controlled ph2s.”