ONTY Plummets Following Stimuvax Phase III Failure

Another cancer vaccine fell by the wayside on Wednesday morning, as Oncothyreon (NASDAQ:ONTY) and Merck Serono (NYSE:MRK) announced that a Phase III study for the potential  immunotherapy Stimuvax failed to meet its primary endpoint. Stimuvax was being evaluated as a maintenance therapy for patients with non small-cell lung cancer who had already undergone first-line treatment. The press release offered no trial results, but stated that the study did not meet its primary endpoint of an improvement in overall survival. With the failure of its lead candidate, shares of Oncothyreon fell 63% to $1.64 in pre-market trading. But while shareholders are making for the exits, Oncothyreon it appears, hasn’t given up hope entirely.

The company indicated that certain patient subgroups in the study demonstrated “notable treatment effects” from Stimuvax, and additional analysis over the coming weeks will determine the benefit-risk profile of the drug in these subgroups. Nevertheless, analysts don’t expect Oncothyreon to present a particularly compelling case following reanalysis, so Oncothyreon’s lead drug status now falls to PX-866, a PI-3 Kinase inhibitor being evaluated in a number of Phase II studies in combination with docetaxel. Although Merck had planned to pursue further indications for Stimuvax, the company has the option to terminate the licensing agreement with Oncothyreon if, “it determines there are issues concerning the safety or efficacy of Stimuvax that would materially and adversely affect Stimuvax’s medical, economic or competitive viability.” Setbacks in Stimuvax’s development a few years ago didn’t prompt termination of the agreement, but the most recent news may be enough for Merck to drop the product.

The failed START trial was a randomized, double-blind, placebo-controlled study of 1,500 patients with unresectable, locally advanced NSCLC. Investors had hoped that an interim analysis of the trial in March of 2012 would demonstrate enough efficacy to stop the study early. When it did not, despite being sufficiently powered to do so, shares dropped 43%. A second Phase III study of Stimuvax, the INSPIRE trial, is ongoing across Asia and has a nearly identical design to the START trial. That study is expected to enroll 420 patients, but the company has yet to announce whether the trial will continue following Wednesday’s news, although today’s drop seems to have factored in the discontinuation of Stimuvax development altogether. In the near-term, traders might take advantage of the “dead cat bounce” after ONTY shares bottom out, but considering ONTY for a long-term position based on the rest of its pipeline will require further due diligence.