Shares of GTx Inc. plunged on Monday after the drugmaker said an experimental treatment with the potential to prevent and treat muscle wasting in cancer patients failed to meet its goals in two late-stage clinical trials.
The company’s shares sank as low as $1.31, or down about 68 percent, in Monday morning trading after closing at $4.15 on Friday. That’s the stock’s biggest intraday slump since its initial public offering in 2004, according to Bloomberg.
The Memphis-based company said in a statement that enobosarm, a drug with the potential to treat muscle wasting in cancer patients, missed clinical trial goals for lean body mass and physical function as it had agreed to with the U.S. Food and Drug Administration.
The drug developer said it plans to speak with both U.S. Food and Drug Administration and European regulatory authorities to determine “the path forward” for enobosarm.
“While we are disappointed that both studies did not meet the pre-specified responder analyses, we are encouraged by the unambiguous effect of enobosarm on muscle and we are confident that it will translate to clinical benefit and potentially increase survival in patients with non-small cell lung cancer,” said Mitchell Steiner, CEO of GTx.
GTx, which booked no revenue in 2012, specializes in developing treatments for cancer and other medical conditions. Its two main drug programs are focused on small molecules that modulate the effects of estrogens and androgens.
Enobosarm is classified as a selective androgen receptor modulator, a drug with the potential to prevent and treat muscle wasting in patients with cancer and other musculoskeletal wasting or muscle-loss conditions, including age-related muscle loss.
The company was approved to study enobosarm in patients with advanced non-small cell lung cancer, the most common type of lung cancer. In January, the FDA granted enobosarm fast-track status, a process reserved for drugs that can treat serious diseases for which there are no or few other treatments.
There are currently no FDA-approved drugs to treat cancer-induced muscle wasting.
GTx said cancer-induced muscle wasting can cause fatigue and weight loss, which contribute to shorter overall survival compared to patients without muscle loss.
The American Cancer Society estimates about 228,190 new cases of lung cancer will be diagnosed in the U.S. in 2013. About 85 percent to 90 percent of these cases are non-small cell lung cancer.
“While some of the pre-specified primary endpoints were not met, I am encouraged by the substantial and consistent effect of enobosarm on muscle in these patients with lung cancer receiving chemotherapy,” said Dr. Jeffrey Crawford, the principal investigator for the enobosarm clinical trials and chief of the division of medical oncology at Duke University School of Medicine.
Dr. Brian Klein, a senior analyst with Stifel Nicolaus & Co., said he had downgraded the stock to “hold” from “buy” after the announcement.
“Just in terms of the data today, which was disappointing, I think that in the near-term there is going to be a lot of caution around the future prospects for this particular drug, enobosarm,” Klein said. “From the perspective of the statistical analysis, these were two failed studies because they did not meet their primary endpoints. … The likelihood of them being approved is pretty slim without additional studies.”
Klein said he expects GTx to turn its focus to Capesaris, another drug in its development pipeline, with the potential to treat men with advanced prostate cancer.
While enobosarm targets androgen receptors, Capesaris targets estrogen receptors.
Still, Klein sounded a note of caution to investors.
“While we still continue to see some potential value in pipeline asset Capesaris, the crowded competitive landscape and ongoing safety concerns make this program high risk and expensive,” according to the analyst note.