Merck & Co Inc and Endocyte Inc said they had stopped a late-stage trial of their experimental ovarian cancer drug as it failed to improve survival rates without the cancer worsening, sending Endocyte's shares tumbling as much as 63 percent.
Vintafolide, Endocyte's lead drug, was recommended for conditional approval in Europe in March but Friday's trial failure could cast a shadow on the approval.
"Now, with this development, we think the chances of formal approval are slim to none," Christopher Raymond, analyst at Robert W. Baird, wrote in a note.
The drug is the only ovarian cancer treatment in advanced trials for Merck, which is considered one of the forerunners in cancer drug research along with Roche.
The European conditional approval, based on initial data, is given to drugs when they treat serious conditions with no other treatment options. The approval recommendation on March 21 had nearly doubled Endocyte's share price.
The halted trial was testing vintafolide in ovarian cancer patients who had received prior treatment.
The drug failed to improve progression-free survival rates, and an independent safety committee reviewing the trial recommended that it be halted.
However, the committee did not identify any safety concerns for patients enrolled in the trial, the companies said in separate statements on Friday.
The companies said they had notified study investigators to suspend screening and dosing participants in the trial.
"We are reviewing and validating the data in collaboration with Merck in order to gain a better understanding of the interim trial results and make our formal decision regarding the execution of the trial," Endocyte Chief Executive Ron Ellis said in the statement.
Patients on the late-stage trial either received the drug in combination with a chemotherapy drug, pegylated liposomal doxorubicin (PLD), or a combination of PLD plus a placebo.
Baird's Raymond said that Friday's news can also raise questions on Endocyte's entire technology platform.
The company's technology works by binding anti-cancer agents to certain receptors on cancer cells, thereby improving their efficacy.
Apart from vintafolide, which is also being tested in lung and breast cancers, Endocyte is developing two more cancer drugs based on the same technology.
Endocyte and Merck signed a $1 billion partnership for the drug, also called Vynfinit, in April 2012.
Endocyte's shares were down 62 percent at $6.66 in late morning trading on the Nasdaq. Merck was down about 2 percent at $58.49.
(Reporting by Esha Dey in Bangalore; Editing by Maju Samuel)