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What: Shares of biotech Exelixis (Nasdaq: EXEL) are being dumped like the plague today, down by as much as a gut-wrenching 41% so far, after the company failed to reach an agreement with regulators over special rules with its phase 3 trial.

So what: The drug in question, cabozantinib, is an experimental prostate cancer drug, and the company plans on measuring its effectiveness by pain reduction in the trial. Exelixis has decided to proceed with the study since it is in the company's best interest, despite lacking regulators' blessings.

Now what: Exelixis is looking to initiate the trial by year's end, and a different trial to measure overall survival in the first half of 2012. The company indicated that leading investigators and consultants advised it to proceed, since it would be in the best interests of patients and Exelixis to initiate the trial as soon as possible. It's a risky move to proceed without getting regulators to sign off on the trial, but biotech investors should be no strangers to risk.

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