The stock of Memphis-based GTx Inc. plunged 45 percent Monday morning after the company explained why the U.S. Food and Drug Administration did not grant approval for its drug to prevent bone fractures in men with prostate cancer who are undergoing hormone deprivation treatment.

A decision by the FDA on Acapodene (toremifene citrate 80 mg) was scheduled for Friday, but the federal agency said it wanted more clinical trials.

Dr. Mitchell “Mitch” Steiner, the chief executive officer of GTx, characterized the directive as a “complete surprise” and said the FDA had “moved the goal post” in a conference call with analysts Monday.

Specifically, the FDA wants a second clinical trial to measure the safety and efficacy of the drug. The federal regulatory agency also wants another trial to demonstrate that the bone-loss drug does not have a detrimental effect on the underlying cancer or on patient survival.

GTx has requested a meeting with the FDA to determine if existing data will satisfy the directive for more clinical trials. If company officials are not successful in making their case, GTx may have to consider whether to scrap plans for the drug altogether and focus on other products in its drug pipeline, Steiner said.

The company’s stock plunged to $4.96 a share Monday after having also taken a hit on Friday. The stock had traded as high as $10.86 a share Thursday morning in advance of the FDA action date.

FDA surprises

Many investors had expected the federal agency to approve the drug because it has been on the market for years for another indication. Toremifene 60 mg, under the brand name Fareston, is prescribed for women with metastatic breast cancer.

Steiner said the FDA’s request for the clinical trial regarding whether the drug would have an adverse effect on the prostate cancer and patient survival was the greater surprise. However, providing this data may be less expensive than having to do a second clinical trial to indicate the efficacy of the drug for preventing bone fractures. Such a study would cost in the range of $30 million to $35 million and take five years.

The agency had previously told the company that only one such trial was necessary, Steiner said.

“The first time we saw any evidence of a second trial being required was in this letter,” he said.

The company received Friday its “Complete Response Letter” from the FDA regarding its new drug application.

When one industry analyst asked if the company might scrap plans for Acapodene if it is not successful in convincing the FDA to use existing data, Steiner responded: “My guess would be that we are going to have to assess that in light of all the other good things going on at GTx. This is not our only pony.”

However, he said the company stood behind its scientific work and clinical studies in regard to the drug. Steiner said he believed the meeting with the FDA, which could occur before Christmas, would be productive.

Although Steiner was frank about his frustration with the FDA during the conference call, he stressed he could not speak for the agency and should not make speculative assumptions.

“This is just Mitch talking now,” he said repeatedly.

Steiner wondered aloud if another application from another company for similar purposes might have had some impact on the FDA’s decision.

“That’s unfair if this is a way to level the playing field,” Steiner said, without specifying the other drug or other company to which he referred.

Still hope

On a positive note, Steiner said the FDA letter made no indication the agency would not allow the drug to be sold because of risk factors for blood clots and irregular heart beats. Some analysts had written that these possible side effects could result in the FDA preventing the drug from going to market.

Steiner said it is yet to be determined whether the FDA decision will result in simply a delay with the drug’s coming to market or a more significant setback. GTx has a European licensing agreement with Ipsen Group, which is seeking regulatory approval for the same drug there.

Although GTx has other products in its drug pipeline, Acapodene has special significance because it would have been the company’s first product. GTx sells Fareston, but does it under terms of a royalty agreement with Orion Corp.

GTx specializes in the discovery of small molecules that selectively target hormone pathways and using these discoveries in drug therapies. Besides pursuing toremifene 80 mgs (Acapodene) to prevent bone fractures in men undergoing hormone deprivation therapy for prostate cancer, the company plans to use different doses for other indications.

GTx is developing toremifene 20 mg for the prevention of prostate cancer in high-risk men and has a phase III clinical trial under way to evaluate the drug.

The company, in partnership with Merck & Co., is working on a new class of drugs to prevent muscle wasting in cancer patients. GTx and Merck are evaluating multiple drug candidates, including Ostarine, for this purpose.

Another drug therapy under development is GTx-758 for the treatment of advanced prostate cancer.

The company is scheduled to release its earnings report Monday when it will host another conference call. GTx, which is in the research and development stages of its product, has yet to turn a profit. However, it has no debt.