UPDATE 2-Favrille cuts 92 pct jobs after lead drug fails

(Adds company comments in paragraph 3 and 5)

By Jennifer Robin Raj

BANGALORE, May 29 (Reuters) - Favrille Inc FVRL.O said it was cutting 92 percent of its workforce after it discontinued development of its lead cancer product, which failed in a late-stage trial, sending its shares down 30 percent.

The biopharmaceutical company said it had provided a notice to 132 of its 144 employees, including six of its eight executive officers, that their employment would end on June 6.

Chief Executive John Longecker and finance chief Tamara Seymour will remain with the company, Seymour said by e-mail.

"The remaining employees will manage a plan to maximize the value of remaining cash, fixed assets and technology," the company said in its statement.

Seymour said the company was still exploring "next steps," but declined to comment on whether the next steps would be bankruptcy or a sale of the company.

Brean Murray Carret & Co analyst Jonathan Aschoff, who had expected the trial to fail, had on Tuesday projected bankruptcy for Favrille after the company reported the failure of its lead cancer drug, Specifid.

The company had also said it did not have resources to study different approaches for the drug, adding that it was ending all further development. The news had wiped out more than 87 percent of the company's market value on Tuesday.

Shares of the San Diego-based Favrille were trading down at 10 cents on Nasdaq. (Editing by Himani Sarkar)