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Posted on Wed, Jul 24, 2013 : 5:58 a.m.

Initial public offering nets U-M pharmaceutical spinoff more than $80 million

By Ben Freed

A pharmaceutical company that spun out of the University of Michigan Office of Technology Transfer in 2004 raised nearly $82 million in an initial public offering July 18.

OncoMed Pharmaceuticals, now based in Redwood City, California, is developing a series of drugs meant to combat the cancer stem cells that are responsible for driving the growth and metastasis of tumors. The company offered 4.8 million shares priced at $17 each, which was above the expected range.

“We're pleased that OncoMed continues to move products resulting from U-M research forward in the clinical process,” Ken Nisbet, director of the Office of Technology Transfer, said in a statement.

"Their IPO is a tremendous accomplishment, and we're looking forward to seeing the drugs reach the market for the benefit of cancer patients worldwide."

Max Wicha, director of the U-M Comprehensive Cancer Center, was part of the initial research that led to the formation of the company and was a co-founder along with fellow U-M doctor Michael Clark, who has since moved to Stanford University.

Not including the IPO financing, OncoMed has attracted $187.1 million in equity financings, $1.2 million in grants and $137.5 in collaboration funding through partnerships with pharmaceutical giants GlaxoSmithKline and Bayer HealthCare. OncoMed has agreements with the pharmaceutical companies that could lead to milestone payments that would pay more than $1 billion.

To date, including the IPO financing, the company has raised a total of $407.5 million.

As part of the licensing arrangement reached with the U-M when OncoMed was formed to commercialize Wicha and Clark’s research, the university retained an equity stake in the company that it continues to hold.

According to a press release from the University of Michigan, U-M Health System researchers reported 117 new inventions, were issued 28 patents and more than 50 license and option agreements were signed with industry partners during the previous fiscal year. There have been approximately 25 startup companies founded from those inventions since OncoMed launched.

OncoMed will be traded on the Nasdaq exchange under the name OMED. As of Tuesday at approximately 11:45 a.m. the company was trading at $27.60 per share.

Local pharmaceutical company Esperion Therapeutics held an initial public offering earlier this summer and raised approximately $73 million.

Ben Freed covers business for You can sign up here to receive Business Review updates every week. Get in touch with Ben at 734-623-2528 or email him at Follow him on twitter @BFreedinA2


Kai Petainen

Wed, Jul 24, 2013 : 1:57 p.m.

Cool! I didn't know about this stock. Neat to see the local connection. I'll keep an eye on this stock... congrats to the IPO!


Wed, Jul 24, 2013 : 1:29 p.m.

Two things drive the human economy Energy (resources) and their intelligent application (Brains/work). The University is the brain maker. That is its job. It provides the "research" part of R&D. UM deserves partial reward for incubating the brains who actually develop the new ideas for products, The researchers are the ones who deserve the bulk of any reward. Unfortunately the way the capital system is rigged today, researchers get peanuts and investors take the bulk of the reward but don't do squat otherwise. Capital only for capital's sake. Brains and their products are optional and depend upon investor whim (brainy main street versus greedy wall street).. When the UM becomes a stakeholder in the development part of R&D as its means of reward capture then its mission rapidly becomes confilicted. It is now a capital-based business who's goal is to maximize University profits from their investment holdings. Brains or not. Say this cancer drug is not as good as the new John Hopkins' product. Does the UM then continue to push its use regardless of patient lives ? Would like avenues of competing research get closed down? Capital says yup! Any which way to make a profit is the right way. Hence the growing corruption in once trustworthy leadership circles. Perhaps the University could apply some of its brainpower to develop a more brain-based economic system where the reward due is based upon a fraction of society's benefit gained. Independently measured and indirectly returned to the research brains - and their Universities - who made it all possible.

Ben Freed

Wed, Jul 24, 2013 : 1:40 p.m.

LXIX, Your insinuation that the UM hospital system would use certain drugs over others due to where they were developed, regardless of their functionality, is frankly troubling. These drugs must go through vigorous FDA testing and then clinical trials. Trials have been held for OncoMed drugs at UM Health system hospitals, but doctors involved in the company (and who continue to hold equity) have not been involved.


Wed, Jul 24, 2013 : 1:15 p.m.

One lesson to be drawn is that Washtenaw County's financial support for Spark is unnecessary as I can't recall one article about such a success for a company nurtured, created or incubated at Spark.

Ben Freed

Wed, Jul 24, 2013 : 1:32 p.m.

I know that SPARK can be a contentious topic here, so I will simply refer you to coverage of some companies that have been nurtured/incubated (as you put it) by the economic development corporation:

Kai Petainen

Wed, Jul 24, 2013 : 1:28 p.m.

I believe ESPR is linked to SPARK in some manner. I think they rented property from them? And Newton is at SPARK and at ESPR, so there is a link between ESPR and SPARK.

First Ammendment Feedback

Wed, Jul 24, 2013 : 12:12 p.m.

Is the money that is made by U-M through their "spinoffs" listed anywhere (easily) accessible? After all, this is public money.

Ben Freed

Wed, Jul 24, 2013 : 1:38 p.m.

That's a great question. It would likely be necessary to make a Freedom of Information Act request to see the precise equity stakes currently held by the University in different companies, but the amount of cash U-M has received through licensing agreements with spinoffs and the sale of equity is readily available. Here's the data for the past three years: (Numbers are approximate and may be off by a few thousand dollars) $13.4 million in FY 2012 $16 million in FY11 $39.8 million in FY10 The reason for the big drop between FY 2010 and FY 2011 per UMOTT director Ken Nisbet: The large drop off in revenue from FY2010 to FY2011 was due to an agreement in 2010 when the university sold its royalty rights to a technology referred to as FluMist to a third party in a process known as royalty monetarization. The process is similar to receiving upfront money for an annuity payment and resulted in an unusually high revenue year for the university.