Lexicon arthritis drug torpedoed by placebo response

Lexicon Pharmaceuticals ($LXRX) says its experimental arthritis drug was torpedoed by an unusually high placebo response in a mid-stage study, sending its stock tumbling 14 percent on the news. After 12 weeks of treatment patients receiving the 70 mg or 110 mg dose of LX2931 demonstrated a respective 44 percent and 41 percent response rate, compared with a 49 percent response rate in the placebo arm. The highest dose, 150 mg, spurred a 60 percent response rate.

"Further study of LX2931 may well involve higher doses of the drug given the relatively benign safety profile observed to date. However, we continue to be skeptical of this program's future, absent the deep pockets of a partner," said JP Morgan analyst Cory Kasimov.

"While we were disappointed by the unusually high placebo effect in this trial, we are encouraged by the excellent overall safety profile observed in the first test of this new mechanism of action in patients with rheumatoid arthritis," Chief Executive Arthur Sands said in a statement.

Lexicon was forced to cut its staff twice, in 2008 and again in early 2009, as it moved to slash its costs during the onslaught of the economic crunch.

- read the Lexicon release
- and here's the Reuters story