CombinatoRx Reckoning Arrives: Stock Crashes on Failed Arthritis Trial

10/6/08Follow @xconomy

Judgment day was harsh for CombinatoRx. The Cambridge, MA-based company reported this morning that its experimental arthritis drug, Synavive, failed in a mid-stage clinical trial for patients with osteoarthritis of the knees. The company’s stock crashed 72 percent.

The drug didn’t show a statistically significant improvement over a placebo when 279 patients were asked about the pain they feel while walking on a flat surface, the company said today in a statement. CEO Alexis Borisy, an Xconomist, called the results “disappointing” and added that they “contain some observations that are difficult to reconcile.” CombinatoRx (NASDAQ: CRXX) fell $2.21, or 72 percent, to $0.83 at 10:22 am Eastern time.

This trial was a huge deal for CombinatoRx, as we wrote last week in a preview of the data release. The company has no marketed products, and has spent $220 million through the end of June on building a pipeline of drug candidates. The company’s medicines are unusual, because instead of developing new drugs from scratch, it uses computer screening methods to find novel treatments that combine conventional pharmaceuticals in new ways to improve their effectiveness. Osteoarthritis, the painful joint disease that affects an estimated 20 million people in the U.S., also has been crying out for something innovative. This is the form of arthritis traditionally associated with old age, degeneration of the joints, and for which people still mostly take over-the-counter pain meds, or possibly Pfizer’s Celebrex.

CombinatoRx is already looking to turn the page on this trial. In the statement, Borisy noted that the company has other drug candidates, namely CRx-401 for Type 2 diabetes and CRx-197 for dermatology conditions, which are expected to produce mid-stage clinical trial results in the next few months. Still, it’s gotta hurt. The company’s VP of communications and investor relations, Gina Nugent, told me a couple weeks ago that a failure wouldn’t represent a “clean out your desks moment” although it might cause people there to cry a little.

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