OncoMed blueprints its future in cancer stem cells
When Paul Hastings joined OncoMed Pharmaceuticals at the beginning of 2006, the fledgling developer had $3 million in the bank and some plans to raise $45 million in a two-tranche Series B. But when the new CEO sat down with his development team and did the math on their likely costs, they concluded that they weren't thinking big enough.
So they set their sights on $86 million.
"Holy cow," Hastings recalls thinking at the time, laying out a game plan to gin one of the biggest rounds in the business.
Then the board started asking questions after GlaxoSmithKline inked a $1.4 billion development deal, which raised the stakes considerably. How much would it take to get two drug candidates through a Phase II trial and another drug target of their own to clinical proof-of-concept?
And the number got bigger.
Last week, Redwood City, CA-based OncoMed announced just how big: $93 million in an expanded second round that totaled $154 million.
"I would never have guessed it," says a pleasantly surprised Hastings.
New investor Nomura Phase4 Ventures participated in the financing along with existing investors like US Venture Partners, Latterell Venture Partners, The Vertical Group, Morgenthaler Ventures, Adams Street Partners, DeNovo Ventures and Bay Partners, as well as GlaxoSmithKline.
Now Hastings says OncoMed is on track to finance its ambitious development goals, provided the company continues to hit all the milestones laid out in its deal with Glaxo. And so far the OncoMed team has been doing just that--right through 2008.
"What we're hoping is that the first GSK molecule will work, which will provide a lot of value for the company, and allow us to advance other candidates," says the CEO. "Right now it's nose to the grindstone, get 21M18 through Phase I, get the next compound, another antibody, moved into the clinic as quickly as possible, develop a third compound as far as we can. And that's really the focus."
OncoMed was founded in 2004 on the research Dr. Michael Clarke and Dr. Max Wicha conducted on the critical role cancer stem cells play in metastasis. The company has been developing antibodies that target the tumorigenic cells, and big pharma - which has seen a big future for itself in oncology--has been paying close attention to its work.
But don't expect any overnight miracles.
"I don't think one antibody will be used for all cancers," says Hastings. "It will take a combination of pathways to block the pathways a cell uses to differentiate. What if GSK has pathway 1, and we're doing another pathway?" A combination therapy may be a much better bet, and another step in the direction of personalized medicine.
"Right now," says Hastings, "we just don't know enough."
OncoMed is keeping its options open for the future. The Glaxo deal, for example, included co-promotion rights.
"It's U.S. and Canada and essentially the ability to co-develop and co-market the first one, 21M18," says Hastings. "There's a formula I can't tell you about. But when we get through Phase II and GSK takes it into Phase III, we can invest in that Phase III program. And then every incremental dollar allows us to hit a trigger to co-promote and co-develop.
"If we were to take the next candidate forward, I would say, OK, I can do another partnership with another company," he adds. "I can consider expanding our relationship with GSK or I can raise money and give my investors the option of taking this forward on its own."
The credit crisis has clearly started taking its toll on the industry, says Hastings. But if you have the right data, work with proprietary programs and a platform technology in cancer or immunology and watch every dollar you spend, then you can still find investors with the money to back your program.
"The cash will take us well beyond 2011," he adds. "The financial crisis should be over by then."
Hastings doesn't expect any FDA approval before 2017, and that's if everything goes well.
In the meantime, Hastings has time to ponder a public offering sometime when public offerings are feasible again. Or a Series C. Or the chance of working a buyout deal.
Says Hastings: "I can tell you that all three of those options will be on my table."
What isn't an option is taking the money and burning through it fast. OncoMed has a staff of 65, and works closely with a number of outsourcing companies to keep its burn rate under control.
So don't ask Hastings if OncoMed is planning to "ramp up" now that it has a big venture round to work with.
"Ramp up is a nasty word to me," says Hastings. "Ramp up means you're so full of yourself the only way you can succeed is by hiring more people. We might expand in the clinical area by a couple of head count, or manufacturing by a couple of people. Whatever we can outsource with trusted partners, we'll do that."