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UPDATE 2-Santhera lead drug fails in key trial, stock falls
* Santhera latest European biotech to suffer major setback
* Shares down 31 percent, pare losses after all-time low
(Adds analyst comment, updates shares)
By Katie Reid and Paul Arnold
ZURICH, May 20 (Reuters) - Swiss Santhera's (SANN.S) lead drug Catena failed in a late stage trial, making it the latest European biotech to suffer a severe setback in recent days, hitting its shares and casting a shadow over the sector.
Santhera had been banking on success in the trial to allow it to file Catena, also known as idebenone, for U.S. and EU approval after the drug last year missed its endpoint in a separate trial in Friedreich's ataxia, a hereditary disease that damages the nervous system.
At 0943 GMT, Santhera shares were down 31 percent at 17.00 Swiss francs, after earlier slumping to a record low of 13.55 francs.
Chief executive Klaus Schollmeier told Reuters the group had enough cash to survive until the end of 2011.
Santhera raised confidence in its financing earlier this year when it narrowed its 2009 net loss to 26 million Swiss francs ($22.5 million) from 45 million francs and slashed its cash burn rate. At the end of 2009, it had 53 million francs in cash. [ID:LDE61P1GM]
But Vontobel analyst Silvia Schanz said the group may now have to take extra steps to protect its finances.
"Although the company guides that they are well financed until end of 2011 and beyond, we reckon that Santhera will have to start an extensive restructuring programme," Schanz said.
The group will now analyse data from two ongoing extension studies, which will provide important long-term follow-up data on the use of the drug in Friedreich's ataxia before deciding on how to proceed, chief scientific officer Thomas Meier said in a statement.
The news comes a week after France's top biotechnology group, NicOx (NCOX.PA), was dealt a blow when a U.S. panel rejected its pain drug naproxcinod, pushing its shares sharply lower. [ID:LDE64C05Z]
Earlier this year, Actelion (ATLN.VX), Europe's largest biotech company, stumbled at a major hurdle when key drug Tracleer failed in a late stage study. [ID:nLDE62004L]
Schollmeier said he was hopeful Santhera would find a partner for its Parkinson's drug fipamezole, which is about to enter Phase III trials, outside of North America by the second half of 2010.
"Talks are going very well," Schollmeier said. (Editing by Dan Lalor, Mike Nesbit) ($1=1.156 Swiss francs)
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