Oncothyreon (ONTY) Slumps, Tecemotide Fails Phase I/II Study

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Pipeline updates are highly awaited events in the pharma/biotech sector as they play an important role in deciding whether or not to invest in a particular company. These updates provide information on experimental drugs and at times give an insight into the commercial potential of the candidate once it is successfully developed and commercialized.

Shares of Oncothyreon Inc. (ONTY) slumped significantly after collaboration partner Germany-based Merck KGaA (MKGAY) informed the former that a randomized phase I/II study, EMR 63325-009, on pipeline candidate tecemotide, did not meet its primary endpoint.

The study, conducted in Japan, evaluated tecemotide versus placebo in patients suffering from stage III non-small cell lung cancer. The study did not meet its primary endpoint of an improvement in overall survival. No treatment effect was seen in any of the secondary endpoints (progression free survival, time to progression or time to failure).

Moreover, Merck KGaA conducted a preliminary analysis of adverse events, which could not identify a clinically meaningful difference between study groups.

Consequently, Merck KGaA recommended Oncothyreon to discontinue the study and stop recruitment of patients in the phase III program on tecemotide in Japan. Merck KGaA also informed Oncothyreon that it will review the implications of these results for the ongoing tecemotide program.

We note that Oncothyreon granted an exclusive, worldwide license to Merck KGaA for the development, manufacture and commercialization of tecemotide.

Oncothyreon has no continuing involvement in the ongoing development, manufacturing or commercialization of tecemotide but is entitled to milestone payments of up to $90 million.

The failure of the study was disappointing as tecemotide was its lead cancer vaccine candidate. Oncothyreon currently has no approved vaccine in its kitty and does not generate revenues.

Oncothyreon currently carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the broader healthcare sector include Allergan (AGN), AstraZeneca (AZN) and Gilead Sciences (GILD). While Allergan and Gilead Sciences sport a Zacks Rank #1 (Strong Buy), AstraZeneca is a Zacks Rank #2 (Buy) stock.

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