BANGALORE Adult stem cell research firm Osiris Therapeutics Inc said two late-stage trials testing its lead product to treat a rare condition that affects bone marrow transplant patients failed to meet the main study goals.
Osiris shares were down 35 percent at $7.94 in afternoon trade on Nasdaq. They touched a lifetime low of $7.32 in morning trade.
The drug, Prochymal, did not show any statistical benefit over a dummy drug in either of the trials that were evaluating the drug in acute Graft versus Host Disease (GvHD), Osiris said.
GvHD is a potentially fatal disease in which immune cells from a transplanted bone marrow recognize the recipient's body as foreign and attack it.
Prochymal is designed to work by interacting with the immune cells in the body, reducing inflammation and assisting in tissue repair.
The two trials were testing the drug in acute GvHD and in steroid-refractory, or steroid-resistant, GvHD patients.
In the acute setting, the patients -- a majority of whom were suffering from skin GvHD -- showed a high response rate to the standard of care, reducing Prochymal's chance to show an effect.
"(Prochymal) may just come down to be just a liver GvHD or gastrointestinal GvHD drug... but in skin GvHD, as a first line treatment, it does not have a benefit," Chief Executive Randal Mills told Reuters.
He said that the company is yet to go through the data in detail and did not have a clear why the standard-of-care response in skin GvHD was so high.
"There are two possibilities -- one is that skin GvHD is readily treatable and the second one is that the skin is a much larger organ...it is possible that when skin GvHD is involved, there are simply not enough cells to cover the skin," Mills said.
RAY OF HOPE
The company said the drug showed promise in patients with steroid-refractory liver GvHD, and based on these results, Osiris plans to file an amendment with U.S. health regulators to the current expanded access program, broadening the entry criteria to include patients with severe GvHD of the liver.
Prochymal also significantly improved response rates in patients with steroid-resistant gastrointestinal GvHD and also in children.
Wedbush Morgan Securities analyst Duane Nash said Prochymal remains a viable drug candidate for the liver and gastrointestinal steroid refractory subpopulations, particularly given the lethality of the indications.
Nash, who kept his "outperform" rating on the stock but cut his fair value estimate to $11 from $22.50, pushed back his expected launch date of the drug for steroid-refractory GvHD by six months until the fourth quarter of 2010.
On a conference call with analysts, Chief Executive Mills refused to comment on whether any of the subset analyses could enable Osiris to complete its submission with the U.S. Food and Drug Administration (FDA) for an approval of the drug.
"We have already started communicating with the FDA and we are going to have a complete dialogue about the best path forward. I do not want to speculate on what that would be but we still have full intentions of bringing Prochymal to market," Mills said.
The company, which has a development and marketing partnership with Genzyme Corp on Prochymal and its potential osteoarthritis drug Chondrogen, would not be losing out on any milestone payments due to the GvHD trial failures.
Mills said that GvHD trials did not have any milestone payments attached to their success or failure.
"The next milestone payment that could come of these trials is through approval," he added.
(Editing by Himani Sarkar, Gopakumar Warrier)