Onconova loses IPO shine with trial failure

While no one will be calling the end of the biotech run after Onconova Therapeutics' rigosertib failed in high-risk myelodysplastic syndrome (MDS), the flop might cause some investors who have been throwing money at what appear to be some highly speculative IPO candidates to pause for thought.

When it debuted as part of the big class of 2013 Onconova was championed as one of the few companies with a late-stage project and a big partner already on board. What industry watchers should be reminded of is that if this company can fail then the likes of OncoMed and Epizyme, which listed with lead assets in phase I, look even more risky.

Downward slide

News of Onconova’s clinical miss caused its shares to fall 43% in early market to $7.90, taking them to almost half of their $15 offer price.  

Alongside the disappointing results in this admittedly hard-to-treat patient population, what may have also caused the share price slide was the loss of an expected milestone payment from Baxter if the trial had been positive. Baxter has European rights for rigosertib, following a $565m deal in September 2013 that saw it pay $50m in upfront fees.

MDS is characterised by the inability of the bone marrow to produce mature, red and white blood cells as well as platelets. In the low-risk form of the disease this can be compensated for by blood transfusions.

However, because these immature cells, called blasts, can enter the blood stream patients with high numbers of blasts in their blood are at a much higher risk of developing full-blown leukaemia. These are the high-risk patients that Onconova was hoping to help in the On-Time trial.

Failed expectations

Unfortunately, the 299 patient trial in patients who had failed or relapsed on hypomethylating agents (HMAs) failed to show an overall survival benefit compare with best supportive care, with median overall survival coming in at 8.2 months versus 5.8 months in the control arm, an statistically insignficant difference.

Positive results in this second line setting would have represented a big win for Onconova, given that there are no other treatments for these patients other than HMAs. The lack of available options was behind the trial being granted a Special Protocol Assessment in 2010; sales had been forecast at $236m in 2018, consensus data from EvaluatePharma show.

So what next for Onconova? While patriotism might be the last refuge of a scoundrel, data mining is increasingly becoming the last refuge of biotech companies with failed trials. And showing no aversion to picking up a shovel Ramesh Kumar, chief executive of Onconova, yesterday unveiled the results of his excavation efforts, biotech gold – a subset of responders.

Patients who had not previously responded to HMAs showed overall survival of 8.5 months against the 4.7 months of patients on best supportive care, a statistically signficant improvement.

Few believe that this will be rich seam to keep mining, given there is as yet no strong evidence as to why the patients groups responded differently. And without a clear biomarker it could be hard to replicate the results in another trial.

Second bite at cherry

The group is still working on an oral version of rigosertib in lower risk MDS, where patients do not have many blasts in the blood and can often get away with having repeated blood transfusions to keep them relatively healthy.

In phase II trials last year oral rigosertib showed positive results and the drug did manage to make some patients transfusion free. Mr Kumar said yesterday that the priority would now be to initiate phase III trials as soon as possible.

So while this may not be the end of the road for Onconova, it has blunted some of the initial IPO promise around rigosertib. So those looking at the list of biotech companies waiting in the wings to float should remember the basic rule of investing, that what goes up can also come down. And hard.

To contact the writer of this story email Lisa Urquhart in London at lisau@epvantge.com or follow @LisaEPVantage on Twitter

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