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Why OncoMed Pharmaceuticals Inc. Shares Collapsed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of OncoMed Pharmaceuticals (NASDAQ: OMED  ) , a clinical-stage biopharmaceutical focused on developing monoclonal antibodies to target cancer stem cells, tumbled as much as 25% this morning after voluntarily halting phase 1 enrollment and dosing in both of its Wnt pathway inhibitor programs, vantictumab (previously OMP-18R5) and Fzd8-Fc (previously OMP-54F28).

So what: According to OncoMed's press release, the company voluntarily halted the studies after being informed from its clinical sites that eight of 63 patients treated with vantictumab and two of 41 treated with Fzd8-Fc had mild-to-moderate bone-related adverse events. As a precautionary step OncoMed halted the study and plans to submit amended protocols to the Food and Drug Administration to continue its study, including lower and less-frequent dosing, updated measures meant to curb bone-related adverse events, and modified enrollment criteria. However, as OncoMed notes, it does plan to continue its study with patients on both therapies as patients in these studies have also demonstrated extended periods without disease progression.

Now what: This, in a nutshell, is the danger associated with clinical-stage companies in that we have nothing tangible to value expect for snippets of trial data here and there and supposed market potential of lead therapies which can often prove to be off the mark. The good news here is that voluntary holds and modified trial protocols do often lead to a drug being able to continue being studied. In addition, both programs are drugs being developed in cooperation with Bayer (NASDAQOTH: BAYRY  ) , meaning there's a big pocketbook backing this project and potentially banking on its success.

While today's move is certainly disappointing, I believe it's far too early to give up on OncoMed. Remember, this is a company that signed what could amount to a multi-billion dollar collaboration deal with Celgene late last year. There's still a lot going on within OncoMed's pipeline, and I wouldn't let that discourage you from keeping a close eye on this company going forward.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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