Tranzyme Pharma TZYM.O said its experimental bowel drug failed to improve post-surgery gastrointestinal recovery in the first of two late-stage trials, sending its shares down nearly 70 percent in premarket trading on Monday.
The biopharmaceutical company, which had planned to test ulimorelin in several additional indications, said it would stop all other activities related to the filing of a new drug application.
However, Tranzyme said it would go ahead and analyze data from the second late-stage trial of ulimorelin, and expects to release this by the second quarter.
The first late-stage study showed that both dosages of the drug, ulimorelin, did not show statistical significance over a dummy drug at improving gastrointestinal recovery after an abdominal surgery.
Tranzyme shared the cost of the late-stage trials on ulimorelin with European specialty pharmaceutical company Norgine B.V., which bought the right to develop and market the drug in Europe and certain other territories in June 2010.
The partnership also made Tranzyme eligible for milestone payments and royalties from the sale of ulimorelin in Norgine's territories.
"We are now focusing on our oral drug TZP-102, which is currently in a phase 2b trial for the treatment of diabetic gastroparesis," Tranzyme's Chief Executive Vipin Garg said in a statement.
TZP-102 is the company's second most advanced clinical candidate after ulimorelin.
Gastroparesis is a condition that causes delayed emptying of food from the stomach into the small intestine due to paralysis of the stomach muscles. Tranzyme is currently testing three other compounds apart from ulimorelin for gastrointestinal motility-related disorders.
Shares of the company, valued at a little over $125 million as of March 9, were trading down nearly 70 percent at $1.55 before the markets opened on Monday.
(Reporting by Zeba Siddiqui in Bangalore; Editing by Don Sebastian, Saumyadeb Chakrabarty)