Oncopeptides' shares crash as it pulls Pepaxto from the market, plans to shut down commercial units

Because its drug for relapsed or refractory multiple myeloma may increase the risk of death, Swedish biotech Oncopeptides has sidelined the treatment in the U.S., a move that will require the company to undergo a radical restructure.

The company's stock price closed the day almost 77% down.

In addition to taking Pepaxto off the market eight months after the drug won accelerated approval from the FDA, Oncopeptides revealed it will shut down its business units in the U.S. and Europe and return to its R&D-focused roots.

The company will be “scaled down to increase our cash runway,” Oncopeptides said in a statement, and will build a “platform for longer term development and growth.”

Oncopeptides said its application in Europe for conditional marketing authorization of Pepaxto remains pending and that it expects a  Committee for Medicinal Products for Human Use opinion in the second quarter of next year.

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“The decision to withdraw Pepaxto from the [U.S.] market has been a difficult decision, that has been made with great consideration and the best intentions for patients and shareholders,” Oncopeptides CEO Marty Duvall said in a statement.

The move to sideline Pepaxto comes six days before an FDA advisory committee was set to discuss whether a confirmatory trial showed the drug increased the risk of death. Oncopeptides said its decision came after interactions with the FDA.

Just five months after it endorsed Pepaxto, the FDA alerted patients and doctors to the safety issue and suspended patient enrollment in the agency-required trial. In the phase 3 OCEAN study, 10% more patients treated with Pepaxto and the steroid dexamethasone died compared to those who were given Bristol Myers Squibb’s Pomalyst and dexamethasone.

RELATED: Large differences in phase 3 overall survival spark FDA hold on Oncopeptides' multiple myeloma drug

“It has become evident that the FDA does not consider that the phase 3 OCEAN study meets the criteria of a confirmatory study,” the company said in its statement. “Oncopeptides believes that the OCEAN data are scientifically meaningful and that the findings warrant further evaluation.”

The snafu is a blow to the FDA’s accelerated approval program, which is designed to get novel drugs to patients faster. The program came under heavy scrutiny with the controversial approval of Biogen’s Alzheimer’s disease treatment Aduhelm.