Shares of small biotech ChemoCentryx (NASDAQ:CCXI) collapsed by 44% in early trading on Friday before paring the losses somewhat. The huge sell-off stemmed from disappointing clinical study results for Crohn's disease drug vercirnon announced by ChemoCentryx partner GlaxoSmithKline (NYSE:GSK).

Results and ramifications
Glaxo had four late-stage studies under way for vercirnon evaluating its effectiveness and safety in treating Crohn's disease. The drugmaker announced that the vercirnon didn't meet its primary endpoint of clinical response or the secondary endpoint of clinical remission in the first of those studies. This first study included 608 adult patients with moderately to severely active Crohn's disease across 208 different global sites. 

ChemoCentryx licensed vercirnon to Glaxo in 2010. The two companies established an alliance in 2006 to focus on chemokine-based therapeutics for potential treatment of inflammatory disorders. That deal could have led to up to $1.5 billion in milestone payments to ChemoCentryx. The latest results certainly lower the bar on expectations for what the small biotech will ultimately receive from its larger partner.

In the meantime, the disappointing results from the first study caused Glaxo to suspend enrollment and dosing for the overall vercirnon program. That could be only a temporary halt as the company analyzes the results, but there's no guarantee at this point.

Looking ahead
Details of the first study haven't been released yet. Glaxo plans to submit the study results to an upcoming scientific meeting as well as publish the data in a scientific journal.

This is clearly horrible news for ChemoCentryx, but vercirnon isn't the only drug in the company's pipeline. A CCR2 antagonist known as CCX140 is in a phase 2 study for diabetic nephropathy. Glaxo also exercised an option to license experimental rheumatoid arthritis drug CCX354 and has an option to license ANCA vasculitis drug CCX168. ChemoCentryx counts a couple of other drugs in phase 1 development plus several in the pre-clinical stage.

As for Glaxo, any hopes that the drugmaker might have harbored to challenge AbbVie's (NYSE:ABBV) Humira are diminished after the disappointment with vercirnon. Humira, which treats Crohn's disease among several other inflammatory conditions, reigns as the top-selling drug in the world.

This setback for ChemoCentryx and Glaxo means that the next likely competitor in the Crohn's disease market is Johnson & Johnson's (NYSE:JNJ) Stelara. The drug, which is already approved for treating psoriasis, is in a phase 3 study for Crohn's disease.

Bad news for vercirnon could also be good news for Coronado Biosciences (NASDAQ:CNDO). The small biotech expects to announce results from its phase 2 study of experimental drug CNDO-201 in treating Crohn's disease later this year.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. 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.