That first sound was developmental stage drug maker Metabasis
The second sound was Metabasis screaming as partner Schering-Plough
In the placebo-controlled trial, CS-917 failed to lower glucose levels in type-2 diabetes patients who took the drug for three months. But the drug may not be completely dead; there were promising results from previous phase 2 trials that measured glucose levels during a shorter timeframe. The company indicated that patients tested in this trial started with lower levels of glycosylated hemoglobin, a measure of glucose load, than in previous trials. The company may run additional studies on patients with higher glucose loads, although it would limit the market value of the drug if it were approved to treat a limited subpopulation of diabetes patients.
The Schering-Plough news wasn't a huge surprise. Metabasis was informed earlier this year that ongoing animal studies revealed that Pradefovir increased the incidence of tumors, and the company stopped the dosing of patients in an ongoing phase 2 trial.
Metabasis originally licensed Pradefovir to Valeant Pharmaceuticals
Metabasis' pipeline isn't completely dead, though. It has one diabetes drug in early phase 2 clinical trials and two more drugs in very early-stage clinical development. It also has pre-clinical development deals with Merck
Its financial picture doesn't look so rosy. At the end of last quarter, the company had $71 million in cash, which certainly isn't enough to get a drug through clinical trials. At some point in the future, Metabasis will likely need to sell more shares or find another partner willing to provide a cash infusion.
Want to know the latest drug stock we've picked for the Fool's market-beating Rule Breakers newsletter? You can take a look at all our recommendations, as well as get access to our message boards and exclusive content, with a 30-day free trial.