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ArQule's Stock Tanks on Lung Cancer Drug Failure

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Lead drug tivantinib did not improve overall survival in study participants. Some Wall Street analysts had been very bullish on the drug's chances.

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MINYANVILLE ORIGINAL Shares of ArQule (NASDAQ:ARQL) dropped by more than half after the company said it is discontinuing a late-stage study of its lead drug in lung-cancer patients.

ArQule and development partner Daiichi Sankyo of Japan said researchers recommended the clinical trial testing tivantinib be stopped because the drug would not meet its goal of showing an improvement in overall survival among patients in the study.

Shares of ArQule fell 57% to $2.15 in early morning trading Tuesday, wiping out all the stock's gains over the past 12 months.

The news came as a real shock as some in the investor and medical communities viewed the drug as a very promising new weapon against cancer. Several Wall Street analysts had buy recommendations on the stock, touting tivantinib as a potentially big-selling drug. Tivantinib also is being tested in liver cancer and colon cancer patients but the lung cancer trials were the furthest along.

CEO Paulo Pucci apologized to investors on a conference call Tuesday morning and vowed to move on with other clinical studies for different types of cancer.

"Unfortunately, the trend in overall survival that we observed in (an earlier) trial did not materialize," Pucci said of the phase III study in lung cancer patients.

The news is actually the second piece of bad news involving tivantinib and lung cancer. In late August, ArQule said another Japanese development partner, Kyowa Hakko Kirin, suspended patient enrollment in a separate lung cancer trial due to safety concerns. Kyowa said it was concerned about a potentially fatal condition characterized by lung scarring. (See ArQule Shares Drop on Lung Cancer Drug Safety Concern.) At the time, analysts dismissed the concern, saying that the study being conducted with Daiichi was far more important. ArQule said there didn't appear to be safety concerns in the lung cancer study that was just discontinued.

Daiichi is co-developing the drug for the US and European markets and most of the world except for Japan, China, and other parts of Asia.

Investors who stick with this stock will have to have faith in the company's ability to succeed with its liver cancer program and possibly other uses. While lung cancer is a tough disease to treat, a number of companies are developing new treatments.

Twitter: @brettchase

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No positions in stocks mentioned.
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