Every year, several fledgling drugmakers will capture the attention of investors as important dates for their lead drugs approach. Some compounds end up flaming out in clinical testing, or fail to gain regulatory approval and shares of the drugmaker never recover. Others like Elan (NYSE:ELN) are able to rise up out of the ashes of regulatory or clinical trial disaster and continue with their operations.

Let's take a look at what's happening to some of the drugmakers whose compounds met with unceremonious disaster last year.

The meltdown
Here's a list of the biggest development stage drugmaker disasters from 2006 and how the tiny drug developers have fared since they announced their clinical trial or regulatory failures.

What Happened

Share Price Close Day Before

Share Price Today

Percentage Change


Potential stroke treatment NXY-059 fails in phase 3 testing

Oct. 25 at $14.20



Encysive Pharmaceuticals (NASDAQ:ENCY)

FDA issues approvable letter for Thelin

March 24 at $9.08



Northfield Laboratories (NASDAQ:NFLD)

Blood substitute PolyHeme fails in phase 3 testing

Dec. 18 at $14.32



Neurocrine Biosciences (NASDAQ:NBIX)

FDA issues approvable letter for insomnia treatment indiplon

May 15 at $54.63




Oncology treatment TELCTYA fails in multiple phase 3 trials

Dec. 22 at $16.26



As can be seen above, some of the failures were unexpected FDA regulatory decisions, and others were late-stage clinical trial disappointments, but the one constant is that all of these development-stage drugmakers have had their share pries cut by roughly the same amount, as investors were betting on a binary outcome for each of these company's lead drugs.

Where they stand today after the aftermath 
Of the five drugmakers, where each company stands today couldn't be more disparate -- despite the similar falls in their share price.

At the time of its failure, Renovis' only compound in clinical testing was NXY-059, which it had partnered with AstraZeneca. After the failure of the drug, AstraZeneca ended its partnership with Renovis.

Fortunately, because of its focus on drug discovery, there was still some life left in Renovis, as Pfizer (NYSE:PFE) agreed to continue funding some of its R&D spending for a novel class of drugs. Last week, a small German drug developer, Evotec, made a stock offer for shares of Renovis, so Renovis will now continue its life as a part of Evotec.

Northfield Laboratories, on the other hand, finds itself in a terrible position after PolyHeme failed in clinical testing, as it has no backup compounds. Even after the PolyHeme arm of the study performed worse than placebo on several relatively important endpoints like patient survival, Northfield still plans on submitting a marketing application with the FDA for PolyHeme. Pigs will fly before the FDA approves PolyHeme on such data, which makes Northfield the most likely of these five to be closing up shop.

In contrast to Northfield, the two with the most signs of life are Neurocrine and Encysive. Even after multiple failures in trying to get Thelin approved in the U.S., Encysive's pulmonary arterial hypertension drug has been approved in other locations throughout the world, including the European Union, last year. This hasn't stopped the bleeding of cash at Encysive, but at least the drugmaker has a marketable compound.

Neurocrine is also continuing to try to bring indiplon to market in the U.S. and has filed a response to the FDA's first approvable letter. The FDA review date of Neurocrine's resubmission of the marketing application for indiplon capsules is scheduled for Dec. 12.

Telik has the most appalling story of the group, following the December announcement of the three failed studies with Telcyta. While withholding the release of the comparative data on the efficacy of Telcyta versus placebo until it could be presented at a scientific meeting, Telik continued using Telcyta on patients in other studies.

When Telik finally released the statistical data on Telcyta from the December studies in May this year at ASCO, it turned out that cancer patients using Telcyta died much sooner than patients who didn't get the drug. This is information that surely patients and their doctors in the ongoing studies would have appreciated knowing, considering that the goal of cancer treatments is to prolong life rather than hasten its end.

Even more astounding than sitting on such critical life-or-death data is that Telik has stated multiple times its commitment to continuing testing Telcyta in some patients. Even with other drugs besides Telcyta in clinical testing, look for Telik to be the next likely candidate of the fallen biotech class to never recover.

Looking for more Foolish drug stock coverage? Check out the Fool's market-beating Rule Breakers newsletter. You can check out all our recommendations with a 30-day free trial.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article. Pfizer is a selection of the Inside Value newsletter. The Fool has a disaster-proof disclosure policy.