UPDATE 2-La Jolla stops developing lupus drug; shares tank

(Recasts; adds analysts’ comments; updates stock movement)

BANGALORE, Feb 12 (Reuters) - La Jolla Pharmaceutical Co LJPC.O said it would stop developing its lead drug candidate, an experimental treatment for lupus, after an interim efficacy analysis showed negative results, wiping out about 90 percent of its market value.

La Jolla, which was struggling to win approval for the drug Riquent for years, said it would provide information on its strategic options in the near future.

“(La Jolla) only have cash till May. Riquent was their only product and I think they will cease operations,” Pacific Growth Equities analyst Liana Moussatos said.

Riquent was being co-developed with BioMarin Pharmaceutical Inc BMRN.O and was La Jolla's only clinical-stage drug candidate.

The companies said an independent data monitoring board analysed the first interim efficacy data from a late stage trial named ASPEN and concluded that continuation of the trial would be “futile.”

In 2004, U.S. regulators had declined to approve the drug until the company provided more clinical data proving it works.

“Riquent is a risky asset that has now been through about 15 human studies over the past two decades,” Leerink Swann analyst Joseph Schwartz said. “This failure highlights the risk of using post-hoc analyses of previously failed studies to design pivotal trials.”

Thursday’s news not just closed the lid on Riquent, but also showed how increasingly difficult it is for drugmakers to get a lupus drug approved.

“The current standard-of-care (for lupus) has reduced the flare rates for lupus patients to the point that it is extremely difficult for any new drug to show benefit,” Pacific Growth’s Moussatos said.

Lupus is a potentially fatal, chronic autoimmune disease in which the body creates antibodies that attack the body’s own connective tissues.

The disease tends to flare up and wane, making it difficult to assess the effectiveness of any treatment.

A few other companies involved in the development of lupus drugs are ZymoGenetics Inc ZGEN.O, Immunomedics Inc IMMU, Human Genome Sciences Inc HGSI.O and Genelabs Technologies Inc GNLB.O. BioMarin and La Jolla, which agreed to co-develop and market Riquent early last month, said they would now unblind the data and evaluate all the clinical results including secondary endpoints.

BioMarin Chief Executive Jean-Jacques Bienaime said the company spent about $15 million as a part of the agreement on Riquent.

“BioMarin loses just a $15 million upfront payment... whereas failing at the final analysis would have cost $52.5 million,” Leerink’s Schwartz said in a note to clients.

La Jolla shares were down more than $2 from its Wednesday’s close of $2.31, while BioMarin shares fell more than 2 percent to $18.97 both on Nasdaq. (Reporting by Esha Dey in Bangalore; Editing by Gopakumar Warrier, Anil D’Silva)