Shares in ArQule (NASDAQ:ARQL) are down more than 50% this morning following a press release announcing the discontinuation of phase 3 trials for tivantinib in the treatment of non-small-cell lung cancer.

This isn't surprising news when you consider recent negative events. At the end of August, Kyowa Hakko Kirin Co. -- the company holding development rights for tivantinib in Japan and parts of Asia -- suspended its own phase 3 trial after its safety review committee investigated patients suffering from interstitial lung disease while on the drug. While this wasn't the ultimate reasoning for the suspension of the trial run by ArQule and partner Daiichi Sankyo group, it certainly raised some red flags.

According to the press release, the reasoning for this stoppage has to do with efficacy. After an interim review by an independent Data Monitoring Committee, it was found that the overall survival benefit for patients receiving a combination of tivantinib and Roche's (NASDAQOTH:RHHBY) erlotinib wasn't significant enough to merit continuing trials. Oddly enough, benefits in progression-free survival were statistically significant, but didn't transfer over to overall survival.

This is a critical blow for ArQule, as tivantinib was its only late stage pipeline candidate. While the company has four other programs in place, all are in phase 1 or pre-clinical stages. The only saving grace for the company is cold hard cash. With $75 million of cash on the balance sheet as of last quarter, ArQule has some time to figure out the next steps. Unfortunately, options appear limited at this juncture.

Brenton Flynn has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.