Merck KGaA doubles down on Oncothyreon's failed cancer vaccine

Shares of Oncothyreon ($ONTY) soared this morning after its partner Merck KGaA said it would take a second swipe at trying to find some value in Stimuvax, the cancer vaccine (now renamed tecemotide) that has already decisively flunked a Phase III trial.

Merck KGaA never gave up on tecemotide. Even after the Phase III failure was announced, the company elected to push ahead on an Asian study as investigators zeroed in on positive results for subgroups of patients in the study. Just months ago the pharma company placed tecemotide in a new immunotherapy unit, along with a slate of early-stage assets designed to hit some popular targets. Betting on another late-stage study based on follow-up analysis of late-stage data, however, has long been viewed as an extremely risky strategy for salvaging value from badly damaged assets.

Merck, though, was inspired to give it a second try after flagging data which showed that non-small cell lung cancer patients receiving tecemotide after concurrent chemoradiotherapy--a combination of chemotherapy and radiotherapy given at the same time--achieved a median overall survival rate of 30.8 months compared 20.6 months in the placebo arm.

"We haven't seen this type of clinically meaningful survival benefit with any other investigational therapy in unresectable Stage III NSCLC. Further investigation might help to better understand the potential role that tecemotide could play in successfully treating these patients," said Dr. Charles Butts, the clinical investigator for the START trial.

In this case Merck KGaA is doubling down on a cancer vaccine after a series of setbacks has raised serious questions about the entire field. GlaxoSmithKline's ($GSK) closely-watched MAGE-A3 just failed a key endpoint, and Dendreon's ($DNDN) Provenge has never been able to live up to the high hopes that greeted its approval. Tecemotide is a MUC1 antigen-specific cancer vaccine designed to rouse the body's immune system to attack expressing the cell-surface glycoprotein.

Merck KGaA's R&D group has experienced a series of setbacks over the past few years, notably including the failure of its late-stage MS therapy cladribine in 2011, which was later dumped entirely. The cladribine fiasco spurred a reorganization of the research group, which appears to still be far off track.  

Investors were ready to buy into the news this morning, though, with shares of Seattle-based Oncothyreon up 28%, restoring some of the luster that was lost in a 50% plunge late last year. 

- here's the press release

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