Vernalis shares dive after pain program flunks PhIIb

Shares of Vernalis tumbled about 20 percent this morning after the UK developer announced that one of its experimental drugs failed a Phase IIb clinical trial for diabetes-related neuropathic pain. The biotech added that it will dump its program for V3381 on that indication, although it will forge ahead with a study on chronic coughing.

For the analysts at Piper Jaffray the trial failure marked a major setback for Vernalis, eliminating a large chunk of the biotech's value. Its shares quickly slid about 20 percent on the news.

The IIb study recruited 162 people for a 13-week trial of V3381 (indantadol). And after it was over researchers concluded that the drug was no more effective than a placebo for neuropathic pain triggered by diabetes.

 "We have consistently stated the highly risky nature of diabetic neuropathy studies but nevertheless are disappointed with the results of the IN-STEP study in this difficult to treat indication," said Ian Garland, the CEO of Vernalis, who quickly tried to put the failure in the best light possible. "However, Vernalis has a broad portfolio of products in clinical trials addressing substantial market opportunities. This, combined with the royalties from increasing sales of frovatriptan and significant existing cash resources that fund us for at least three years at current research and development investment levels, continues to give Vernalis strong potential for growth and value generation."

Vernalis has had plenty of experience with development failure. Once known as British Biotech, the developer's lead drug in the ‘90s--marimastat--failed in clinical trials as well, triggering a long fall from grace and its two billion pound market capitalization.

- see Vernalis' release
- here's the story from Reuters