Volatile BioLineRx shares decimated by PhII/III schizophrenia drug failure

Shares of Israel's BioLineRx ($BLRX) plunged 51% this morning when the biotech announced that it was shutting down a Phase II/III  study for an experimental schizophrenia treatment--its lead program--after an interim analysis forced the company to acknowledge that investigators were headed for a failure. 

The study was for BL-1020, which has long had a volatile share price inflamed by a ready willingness to tout the blockbuster potential of its programs. The biotech has described BL-1020 as a first in class, orally available, GABA-enhanced antipsychotic. Back in 2009, BioLineRx boasted that the Phase IIb data demonstrated that the drug was a breakthrough treatment expected to grab a 20% to 30% share of the growing schizophrenia market, according to a Reuters report at the time.

"These disappointing results underscore the difficulty of treating cognition in schizophrenia, which remains an unmet medical need," said BioLineRx CEO Kinneret Savitsky. "We would like to thank the patients and investigators for their participation and engagement in the study. While we certainly would have preferred to see a positive outcome on this trial, the decision to perform the interim analysis, without waiting until the end of the study, provides us with the opportunity to allocate additional resources to our other projects in order to accelerate their development. This confirms the advantage of our business model, which is based on a broad pipeline with a number of compounds, at different stages of development, and for multiple indications." 

The biotech saw its stock spike 25% in early 2012 after it in-licensed a preclinical hepatitis C drug at a time that field was sizzling in the wake of some big buyouts in the hep C market, with Bloomberg helpfully mentioning that the company had increased the prospects of a takeover. The biotech didn't say what it paid to get the drug, but it was quick to mention the blockbuster market it was aiming at.  

- here's the release