Oncothyreon partner Merck Serono suspends studies of cancer drug Stimuvax over safety concerns

Oncothyreon partner suspends cancer drug studies

SEATTLE — Clinical-stage biotechnology company Oncothyreon Inc. said Tuesday its partner Merck Serono temporarily suspended all clinical trials of the drug candidate Stimuvax because of potential safety issues.

Stimuvax is Oncothyreon’s lead drug candidate and the company does not have a product on the market. Merck Serono is part of Germany-based Merck KGaA.

Shares of Oncothyreon fell $1.37, or 29 percent, to $3.41 in afternoon trading. Shares have traded between $1.18 and $7.77 over the last 52 weeks.

The company said the suspension was a result of a “suspected unexpected serious adverse reaction” in a multiple myeloma patient. Specifically, the patient in a small exploratory study receiving an intensive regimen of the drug developed an inflammation of the brain.

The drug is currently being studied separately in two larger, Phase III, studies focusing on breast and lung cancer. Those studies are suspended because of the potential safety issue.

Rodman & Renshaw analyst Simos Simeonidis is reviewing ratings on the stock, citing the safety issue.

“This could end up being very bad news for Oncothyreon, but we are cautiously optimistic on the potential resolution of this issue, ” he said.

He cited differences in dosing for each of the clinical trials, which could make this program halt a temporary setback. Also, he said the late-stage lung cancer study has been ongoing since 2007 and is likely fully enrolled with patients and no reported cases of encephalitis, or inflammation of the brain.

The most likely scenarios include delays between three and nine months as the company determines whether the one case of encephalitis is isolated. Less likely scenarios, but much more hurtful, involve Merck (KGaA) giving the program back to Oncothyreon to develop on its own or if Oncothyreon gets the program back and ends development entirely.

WBB Securities analyst Stephen G. Brozak on Tuesday maintained a negative view on the stock, citing Oncothyreon’s dependency on Merck KGaA for Stimuvax development. Under their deal, Oncothyreon forfeited all development, manufacturing, and commercial responsibility to Merck KGaA.

Brozak reaffirmed a “Sell” rating on the stock, which he set in February, citing risks to the drug development program.