On Monday, drug developer Adolor (NASDAQ:ADLR) and partner GlaxoSmithKline (NYSE:GSK) announced the preliminary top-line results from "study 14" of Adolor's lead compound, Entereg. Shares of Adolor crashed nearly 60%, after the trial revealed new safety issues with Entereg as a long-term treatment for patients with opioid-induced bowel dysfunction (OBD).

An interim look at the data from this large 805-person study already showed more incidents of serious adverse cardiovascular events in Entereg patients, compared to a placebo group. But the data announcement's worst surprise was Entereg patients' additional higher occurrence of neoplasms (tumors); 2.8% of patients who took the drug experienced neoplasms, versus only 0.7% for those on placebo.

Entereg's chance at regulatory approval for OBD treatment isn't necessarily dead, but its odds are dramatically worse. In this study, statistically significant differences in efficacy (and adverse events) could have arisen for three reasons:

  1. Entereg could be causing the increased prevalence of the adverse events.
  2. There could be a difference between the group of patients that received the drug, and the placebo patients. Perhaps the drug group had more factors that predisposed them to cardiovascular conditions and neoplasms.
  3. This was a statistical fluke, occurring from random chance.

In assessing Entereg's future chances, investors need to decide which of these three possibilities is most likely. As my wise old statistics professor used to say, it's important to remember that correlation does not necessarily imply causation. If you run enough of these clinical trials (Adolor ran six non-cancer OBD studies), funky results are bound to come up eventually. The odds that the cardiovascular and neoplasm events in this study were a fluke grow further when you consider that these adverse events weren't an issue in any of the other trials.

On the flip side, this study was designed as a safety study, and by Adolor's own admissions, the placebo and drug patients groups maintained balanced patient profiles. That seems to rule out explanation No. 2, which really looks bad for Entereg. The increased tumors in this study are particularly difficult to explain, and Glaxo's suspension of development on the drug after discovering this safety issue doesn't bode well for Adolor.

It may be possible for Adolor to get the FDA to look past the slight imbalance in cardiovascular risk seen in this study. But the possible neoplasm safety issues will be extremely difficult to overcome, which could spur GlaxoSmithKline to drop Entereg development altogether. It was planning to run a new clinical study later this year, in hopes of overcoming the cardiovascular issues. Now Glaxo is putting that trial on hold.

The big winner from this delay with Entereg is Progenics Pharmaceuticals (NASDAQ:PGNX) and its partner Wyeth (NYSE:WYE). Just last week, Progenics filed a marketing application with the FDA for its own compound as a treatment in a related indication. Progenics' drug-development program has suffered its own setbacks in the past two months, but the latest Entereg safety issue seems to have placed it far ahead of Adolor now.

Shares of Adolor are currently trading at roughly the $186 million in cash and equivalents on its balance sheet. Investors seem to be ascribing little value to Entereg's chances of approval, or its market opportunity if approved. If GlaxoSmith Kline abandons its partnership with Adolor, Entereg's research and development costs will soar as Adolor foots the entire bill for all future clinical trials.

Adolor is also trying to gain regulatory approval for Entereg as a treatment for postoperative ileus -- bowel dysfunction after abdominal surgery. The FDA gave Adolor an approvable letter for this indication in November 2006, requesting safety data from "study 14" as a precondition for full approval. Now that requested data has come out much worse than expected, it's doubtful that the FDA will approve Entereg as a POI treatment without more clinical trial work. Adolor plans to submit an approvable letter response for Entereg's use in treating POI later this year.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. GlaxoSmithKline is an Income Investor recommendation. The Fool has a disclosure policy.