UPDATE 1-NexMed says not to file NDA for nail drug; shares sink

(Recasts, adds details, share movement)

Aug 26 (Reuters) - Drug developer NexMed Inc (NEXM.O) said it will not submit a new drug application (NDA) for its nail infection drug based on results of late stage clinical studies, sending its shares down more than 76 percent to their lowest in 13 years.

The drug candidate, NM100060, is a topical application for the treatment of toenail fungus.

NexMed said it will not release any information regarding specific results of the studies at this time. However, no significant adverse event was reported in the studies.

In September 2005, NexMed signed an agreement with Novartis AG (NOVN.VX) under which Novartis assumed all clinical development, regulatory, manufacturing and marketing responsibilities for the product.

It can take up to 2 to 3 months before Novartis can complete its analysis and generate its final report, NexMed's Chief Executive Officer Vivian Liu said in a conference call. The company said its agreement with Novartis is still in place.

A European comparator study is still ongoing, and the results are expected mid 2009, Liu said.

Shares of the East Windsor, New Jersey-based company were down $1.04 at 32 cents in after-hours trading. They closed at $1.36 in regular trading on Nasdaq. (Reporting by Suzannah Benjamin in Bangalore; Editing by Gopakumar Warrier)