February 17, 2015 / 1:45 PM / 4 years ago

CORRECTED-UPDATE 2-VBL to stop developing drug for psoriasis, ulcerative colitis

(Corrects first bullet point to clarify the drug failed in mid-stage, not late-stage trials)

* Drug fails in mid-stage trials

* Shares down 55.5 pct

Feb 17 (Reuters) - Israel’s VBL Therapeutics said it would stop developing its experimental inflammatory drug to fight psoriasis and ulcerative colitis, leading to half its market value being wiped off.

The company said the drug, VB-201, failed to meet the main goal in separate mid-stage trials testing it in patients with moderate-to-severe plaque psoriasis and mild-to-moderate ulcerative colitis, an inflammatory bowel disease.

VB-201 aims to treat chronic immune-inflammatory diseases by mimicking the body’s natural anti-inflammatory response.

VBL Therapeutics, the operative name of Vascular Biogenics Ltd, was forced to settle for a $40 million IPO last year after its prior effort to go public was thwarted as a major investor failed to complete a stock purchase.

The Tel-Aviv-based company separately said the U.S. Food and Drug Administration lifted a partial hold on another drug that it is testing to treat an aggressive form of brain cancer.

The biotech drug, VB-111, will be evaluated in a late-stage study in patients with recurrent glioblastoma. The hold was imposed by the agency in July, pending additional data.

VB-111 is also being tested to fight ovarian cancer and the most common form of thyroid cancer.

VBL Therapeutics shares were down 55.5 percent at $6.28 on the Nasdaq in early trading on Tuesday. The stock had more than doubled in value this year through Friday. (Reporting by Natalie Grover in Bengaluru; Editing by Saumyadeb Chakrabarty and Joyjeet Das)

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