Tranzyme shares implode as lead GI drug flunks its PhIII closeup

Tranzyme Pharmaceuticals, another biotech which recently went public, is demonstrating just why biotech investors are so skittish about development-stage companies. Its shares blew up this morning, alongside Anthera's, after the biotech said that its lead GI drug looked no better than a placebo in Phase III. A second, mirror Phase III is continuing, but with the treatment failing both primary and secondary endpoints, Tranzyme says this morning that it will halt any further NDA work underway as it shifts focus to an oral program.

Investors wasted little time in responding to the setback. Tranzyme--which was forced to take a huge cut in its share price when it went public earlier this year--had to watch as its shares imploded, dropping 70%. The readout from the second late-stage study is due by the end of the second quarter.

Durham, NC-based Tranzyme ($TZYM), which we named a Fierce 15 company back in 2005, has been looking for new drugs that can restart the digestive system in post-bowel surgery patients. But both doses of ulimorelin in the late-stage study failed to discern any difference in response with patients taking a placebo. 

"These results are surprising and disappointing. While we are still planning to analyze the data from the second phase III trial ULISES 008, which we expect by the end of the second quarter, we are stopping all other NDA activities for ulimorelin," said Tranzyme CEO Vipin K. Garg. "We are now focusing on our oral drug TZP-102 which is currently in a phase IIb trial for the treatment of diabetic gastroparesis. In this trial, we are looking for improvement in upper GI symptoms over a twelve-week treatment period."

- here's the press release
- here's the Reuters story