Santhera investors bail after lead drug fails PhIII

Switzerland's Santhera Pharmaceuticals (SANN) says its lead drug failed a late-stage trial. And the news triggered a sharp, 31 percent drop in the developer's stock. Even though CEO Klaus Schollmeier told Reuters that the company has plenty of cash on hand to make it through next year, at least one analyst quickly concluded that the biotech may have to restructure.

Researchers tested three doses of Catena against a placebo in a trial that recruited 232 patients with Friedreich's Ataxia. But the data showed no significant difference between the dose arms and a placebo on a key rating scale to gauge efficacy. And the drug failed the secondary endpoints as well.

Schollmeier told Reuters that he's hopeful that Santhera can find a partner for markets outside of North America for its Parkinson's drug fipamezole, which is headed into late-stage testing. But some analysts are looking for another shoe to drop at Santhera.

"Although the company guides that they are well financed until end of 2011 and beyond, we reckon that Santhera will have to start an extensive restructuring program," Vontobel analyst Silvia Schanz told Reuters.

As Reuters points out, there have been a string of painful stumbles by European biotechs recently, ranging from NicOx's problems with an FDA panel's review of the NSAID naproxcinod to the late-stage failure of Actelion's Tracleer.

- take a look at Santhera's release
- here's the Reuters story