Rigel Pharmaceuticals Inc said it would stop testing its drug for some patients with dry eye disease after the treatment failed a mid-stage study.
The study was evaluating the eye drop formulation of the drug, R348, against a placebo. The drug is aimed at reducing the underlying inflammation responsible for the symptoms of chronic dry eye syndrome.
R348's failure is the latest in a string of setbacks for Rigel. The company stopped developing its skin disorder and asthma drugs last year after the treatments failed mid-stage trials.
British drugmaker AstraZeneca Plc scrapped its licensing deal for Rigel's rheumatoid arthritis treatment in June 2013.
The only other drug left in Rigel's armory, fostamatinib, is being tested for use in Immune Thrombocytopenic Purpura, a blood disorder, and IgA Nephropathy, a chronic autoimmune disease.
Rigel said it planned to continue another mid-stage study of R348 in dry eye patients with graft versus host disease.
There "may be more scientific rationale" in developing the compound in this indication, Wells Fargo analyst Brian Abrahams said.
Chronic dry eye syndrome affects the eye's tear-producing glands. Patients suffer from blurred vision and also experience itching or a burning sensation in the eyes.
The disease affects more than 5 million Americans and many patients with chronic dry eye syndrome also suffer from autoimmune conditions, the company said.
Rigel also said it would stop testing another drug, codenamed R118, due to its side-effect profile in early-stage trials.
The San Francisco, California-based company's stock was down 10.5 pct at $2.77 on the Nasdaq on Tuesday. The stock recorded its biggest intra-day percentage fall in about a year.
(Reporting by Natalie Grover in Bangalore; Editing by Simon Jennings)