After seeing its two most advanced cancer therapies fail in clinical trials this month, OncoMed Pharmaceuticals is slashing its workforce by half and focusing on compounds in earlier stages of development, the company announced Monday.
The layoffs will leave Redwood City, CA-based OncoMed with 64 full-time employees. The company says that the cuts will save about $60 million over the next two years, leaving it enough cash to last through the third quarter of 2019.
April has been the cruelest month for OncoMed (NASDAQ: OMED). Two weeks ago, the company announced that its stem cell cancer drug demcizumab, which the company had developed in partnership with Summit, NJ-based Celgene (NASDAQ: CELG) as a potential pancreatic cancer treatment, failed to work better than current treatments in a Phase 2 clinical trial. Separately, OncoMed also announced that Bayer would not exercise its option to license two of the company’s cancer drugs, leaving the company on the hook for their development costs going forward.
OncoMed got another dose of bad news last week with top line results for a Phase 2 trial in patients with small cell lung cancer. Those results showed that its drug tarextumab, in combination with chemotherapy, failed to outperform a placebo combined with chemotherapy.
Following last week’s clinical trial failure, OncoMed CEO Paul Hastings said the company would undertake a “comprehensive portfolio prioritization review.” On Monday, the company said that it would turn its focus to rosmantuzumab, a compound that showed activity against tumors for colon, lung, and ovarian cancers in pre-clinical tests; navicixizumab, a compound that the company has started testing in two Phase 1 clinical trials enrolling patients with ovarian and colorectal cancers; and OMP-313M32, a pre-clinical immunotherapy treatment that OncoMed says has multiple ways to spark anti-tumor activity. All three compounds are part of its collaboration with Celgene, and the company stands to gain up to $98 million in milestone payments pegged to their progress.
The company expects to file an application to begin clinical trials on a fourth compound, OMP-336B11, in the first half of this year. OncoMed holds all of the rights to that compound.
OncoMed says it estimates it will incur a one-time charge of $2.6 million related to the layoffs. Most of those charges will be paid by the end of the second quarter.
Image of pancreatic cancer cells by the National Cancer Institute.