Irish pharmaceuticals company AGI Therapeutics PLC (A91.DB) Friday said its lead drug failed in a critical trial, sending its shares down more than 50%. Dublin-based AGI, which specializes in treatments for gastrointestinal conditions, said it will now scrap development of its experimental drug Rezular as a treatment for irritable bowel syndrome and focus on the other drugs in its pipeline.

""We believe Rezular will not meet the regulatory hurdles for an irritable bowel syndrome therapy," AGI Chief Executive John Devane said on a conference call with analysts Friday.

At 0933 GMT, London-traded shares in AGI were down 21 pence or 53% at 18.5 pence, underperforming a higher FTSE All-Share index, up 0.6%.

AGI said there wasn't any significant difference between the overall relief of symptoms of irritable bowel syndrome between patients taking different doses of Rezular or those taking a dummy version in a large phase three trial.

However, data did show it helped certain symptoms, and Devane said AGI would scrutinize the full data from the trial closely to see whether there's an opportunity to develop Rezular as a treatment for diarrhea, for example.

Devane told Dow Jones Newswires AGI will now focus on managing its cash and deciding around which of the other experimental products in its pipeline it will prioritize its development activities.

Candidates include a patch for preventing diarrhea caused by chemotherapy, a treatment for inflammatory bowel conditions like ulcerative colitis, and a treatment for indigestion.

AGI had hoped success in Rezular's phase three study would lead to a licensing deal. Without that, analysts are forecasting the company will finish the year with about $7.5 million to $10 million in cash, a range Chief Financial Officer David Kelly said on the conference call he was comfortable with.

Devane said it's too early to say whether the company will seek to raise more money until it has decided where in its pipeline to focus its drug development efforts.

Irritable bowel syndrome has been a tough field for pharmaceutical companies to crack. Zelnorm, a $500 million-a-year Novartis AG (NOVN.VX) drug for irritable bowel syndrome, was pulled from the market on safety fears in 2007, just a few years after GlaxoSmithKline PLC's (GSK.LN) Lotronex raised safety concerns, although patients successfully lobbied to keep it on the market.

AGI's failure caps a dire run for small drug makers so far this year. Drugs from Intercytex Group PLC (ICX.LN), Minster Pharmaceuticals PLC (MPM.LN) and Neuropharm Group PLC (NPH.LN) all failed crucial trials.

Company Web site: www.agitherapeutics.com

-By Rachael Gormley, Dow Jones Newswires; 44-20-7842-9308; rachael.gormley@dowjones.com
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