In the world of pharmaceutical drug development, the old adage about Murphy's Law and the possibility for things to go wrong definitely applies. Last week, Rule Breakers pick Panacos Pharmaceuticals (NASDAQ:PANC) ran up against this law, and shares were down 30% when it announced disappointing clinical trial results due to an incorrectly formulated drug.

The results Panacos presented were part of a phase 2-b trial for its lead drug, bevirimat, to treat HIV. The trial was designed to find the optimal dose and test the efficacy and safety of a tablet form of the drug, rather than the more inconvenient liquid form of bevirimat that had been used in previous trials.

In the results, presented after 12 patients had been dosed with the drug, patients treated with bevirimat had a mean HIV viral load reduction of 0.36 log10 after 14 days of treatment. Panacos was expecting a 1 log10 reduction in viral loads for most patients, based on earlier clinical studies with the liquid form of the drug. Viral load is a measure of the amount of HIV in the bloodstream, and reducing this amount is a good predictor of control of the disease, so obviously the more viral load that can be reduced, the more effective the drug is.

This was the first clinical trial using this tablet form of bevirimat. Panacos' management was unsure why the 400-mg tablet form of bevirimat used in this trial was not as effective as the previously assumed equivalent 200-mg liquid form of the drug, but said they would initiate studies to figure out what the problem was.

If this was the only problem, then the simple solution would be to just up the dosage of the tablet form of the drug. But during the conference call, Panacos' management stated another issue: The tablet formulation is producing lots of variability in how much bevirimat is being absorbed into the body, not only "between patients (but also) between studies." Making sure a consistent amount of the drug enters into someone's bloodstream is very important, and as Panacos' president Graham Allaway added, "the tablet form does not always deliver a full or predictable payload of bevirimat to the patients."

The good news is that clearly bevirimat works in some patients. The previous liquid form of the drug has shown this to be true in small phase 1, 2, and 2-a trials last year, and even in this first part of the phase 2-b trial, three of the 12 patients dosed with the drug had greater than 1 log reductions in their viral load (and two of these patients achieved undetectable levels of the virus). It's also important to remember that this trial is for patients failing other HIV treatments, so the hurdles to achieve these results are higher than if the drug was being tested in the real world.

Although it is way too early to make any judgments on bevirimat's safety, these interim results even showed it to have a good safety profile in the short term, with no patients dropping out of the trial due to the drug's side effects and no serious adverse events popping up thus far.

These types of kinks in the drug development process pop up all the time. Delays and unexpected outcomes are a fact of life in this industry. This formulation issue is hardly a showstopper for bevirimat's development, and Panacos' management stated that fixing the tablet form to better deliver bevirimat is "a tractable problem" and that dosing in the trial may be able to start up again in "a very reasonable time frame."

Under the timeline given, the best case would be a delay of about a quarter for clinical trial work to resume, but it could be up to 12 months depending on how discussions with the FDA proceed. Panacos plans to update timelines for bevirimat sometime in the first quarter next year.

What this delay means for Panacos is that it will burn more cash before getting to its pivotal phase 3 trials for bevirimat. The previous timeline was for these phase 3 trials to start at the end of 2007, but now that things have been pushed back, it could be as late as the end of 2008 before these trials begin. Even with these delays, barring any sort of long-term holdup in resuming clinical testing of bevirimat, investors are getting shares of Panacos at a great fire-sale price now.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.