* Drug failed to meet goal of improving survival without the cancer growing
* Drug also failed to meet secondary goal of showing improved patient response
* ArQule shares down 15 pct (Adds analyst comments, background; updates share movement)
Jan 11 (Reuters) - An experimental colorectal cancer drug being developed by ArQule Inc and Japan's Daiichi Sankyo Co Ltd failed to improve patient survival without the cancer worsening, in a mid-stage trial, sending ArQule's shares down 18 percent.
ArQule shares were down 15 percent at $2.48 on the Nasdaq on Friday morning. They touched a low of $2.39 earlier in the session.
The trial, which enrolled 122 patients with refractory or relapsed colorectal cancer, also failed to meet the secondary goal of showing improved response to the drug tivantinib.
RBC Capital Markets analyst Adnan Butt said the stock fall was an "overreaction," as Wall Street's financial models did not include the drug's use in colorectal cancer.
"We attribute the majority of ArQule's value to the second-line liver cancer indication at this stage," Butt wrote in a note.
The drug tivantinib, ArQule's lead candidate, is also being developed as a potential treatment for hepatocellular carcinoma or liver cancer.
ArQule and Daiichi in October said they reached an agreement with the U.S. regulator on the design of a late-stage trial of tivantinib in liver cancer.
Friday's trial failure is the latest in a series of drug-related bad news for the company in the past few months. It discontinued a lung cancer trial in October and its Asian partner Kyowa Hakko Kirin Co halted another trial in August due to safety issues.
Both the trials were related to tivantinib.
The string of trial failures have dragged the company's shares, which have lost nearly 53 percent of their value over the past six months.
MID-STAGE TRIAL FAILS
For the latest mid-stage trial, patients were either given the drug, tivantinib, twice daily, in combination with older cancer drugs irinotecan and cetuximab, or placebo plus irinotecan and cetuximab.
The drug improved patients' progression-free survival (PFS), or survival without the cancer growing, but the improvement was not statistically significant.
PFS was 8.3 months for patients treated with the drug, compared with 7.3 months for those receiving a placebo.
ArQule tied up with Daiichi Sankyo in December 2008 to co-develop tivantinib in the United States, Europe, South America and other regions.
The companies plan to continue discussions with colorectal cancer experts to determine how to proceed with further development of the drug for this cancer, Daiichi said. (Reporting by Esha Dey in Bangalore; Editing by Supriya Kurane)