Nuvelo plunges 79% on drug test failure

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nuveloCHICAGO (Reuters) -- An experimental blood clot dissolver by Nuvelo Inc. and its German partner Bayer failed to meet its main goal in two late-stage studies, sending the U.S. biotechnology company's shares down more than 79 percent Monday.

Nuvelo (down $15.50 to $4.05) shares closed at $4.05, down $15.50.

The companies said they had temporarily suspended enrollment in all trials of the alfimeprase compound pending further analysis and discussions with outside experts and regulatory agencies.

The news rattled investors, who had high hopes for the drug.

"We are very surprised by these results, given the strength of the prior (midstage) results," said CIBC analyst Bret Holley in a note to clients.

Alfimeprase was initially targeted as a safer, more effective treatment for complications caused by blood clots. Analysts, however, saw it becoming a treatment for much bigger markets, such as stroke, and they projected annual sales of as much as $2 billion eventually.

San Carlos, Calif.-based Nuvelo holds U.S. marketing rights to alfimeprase, and Bayer has the rights to market the drug outside the United States. Bayer has said peak sales outside the United States could be in the hundreds of millions of euros.

In the late-stage study, however, the drug failed to help patients with acute peripheral arterial occlusion or blocked arteries in the legs or other extremities avoid the need for surgery within 30 days of treatment.

Alfimeprase also failed to meet its main goal in a late-stage study of blocked central venous catheters, or tiny tubes inserted in the vein used to give medications, fluids or blood products over a long period of time.

The catheter is threaded through the blood vessels until it reaches a large vein near the heart. The study was designed to restore function within 15 minutes.

JP Morgan analyst Geoffrey Meacham, in a note to clients, said the compound was Nuvelo's "key near- and longer-term value driver." He cut his rating on Nuvelo to "neutral" from "overweight."

The company had about $3 in cash per share, he noted.

Shares in Bayer (down $0.05 to $52.43) were off 0.1 percent, underperforming a 0.7 percent rise in the German blue-chip DAX index.

There was other bad news in the industry Monday as well. Medicines Co. (Charts) plummeted about 7 percent after Congress failed to enact a bill that would have helped the company's bid to extend a patent on its flagship drug Angiomax, a blood thinner.

Trading was mixed elsewhere. Genentech edged upward, while PDL Biopharma was off 1.5 percent.

source Reuters