Tranzyme Inc said a preliminary analysis showed that its experimental drug to treat a type of paralysis of the stomach did not meet the main goal of a mid-stage trial, sending the company's shares to a life low.
The shares, which started trading on the Nasdaq at $4.00 in April last year, fell to $1.00 on Thursday after the initial results of the testing on Tranzyme's most advanced drug in development.
The main goal of the study was to reduce four symptoms in patients suffering from gastroparesis -- a condition that slows down the movement of food through the digestive tract due to paralysis of stomach muscles.
The trial was studying two doses of the drug, TZP-102, administered once a day for 12 weeks on diabetes patients. The drug was well tolerated, the company said.
JMP Securities analyst Liisa Bayko said the results were not surprising, since the odds of the trial meeting its endpoint were fifty-fifty.
"It's the first proof of concept mechanism in this disease, the drug came out on the wrong side, unfortunately," she said.
Tranzyme is currently conducting a second mid-stage trial to test a 10 mg dose of TZP-102 administered three times a day. The company expects results from the DIGEST trial in the first half of 2013.
Bayko said there was no overwhelmingly convincing evidence yet that the result of this trial would be positive.
TZP-102 is also in early-stage trials for the treatment of other chronic gastrointestinal motility disorders.
This setback comes after the company's experimental drug to improve gastrointestinal recovery after surgery failed to meet the main goals of a second late-stage trial in May.
The company had said at the time that it would focus on its drug to treat diabetic gastroparesis.
Shares of the company, which have risen about 23 percent since late May, closed at $3.97 on Wednesday on the Nasdaq.
(Editing by Roshni Menon and Rodney Joyce)