(Reuters) - Ziopharm Oncology Inc said it will stop developing its drug to treat soft tissue sarcoma after it failed to improve patient survival by keeping the cancer from worsening, wiping out nearly two-thirds of the company's market value.
The drug, palifosfamide, was being tested in a late-stage trial called Picasso 3 as a treatment for metastatic soft tissue sarcoma - a type of cancer of the bone, cartilage, fat or muscles.
"We know that based on (the) progression-free survival (rate), there is no way the drug will get approval anywhere in the world," Chief Executive Jonathan Lewis said.
The trial involved 447 patients with metastatic soft tissue sarcoma across 150 clinical centers.
Patients received either palifosfamide along with doxirubicin - an approved cancer drug - or doxirubicin alone.
An independent committee recommended that the patients be followed to test the improvement in their overall survival, but the company said it does not expect to continue the follow-up.
Brinson Patrick Securities analyst Vernon Bernardino said the company's decision to stop the drug's development was "drastic" but noted that the company had "burned" a lot of money on the project, and would probably need to raise money later in the year.
Ziopharm will now evaluate all its palifosfamide programs.
As a part of the review, it will convert another ongoing study - testing the drug as a treatment for small cell lung cancer - into a mid-stage trial, CEO Lewis said. Ziopharm began the study, called Matisse, in June last year after completing an early-stage trial.
Analyst Bernardino said the move to convert the Matisse study into a mid-stage trial did not come as a surprise. He said Ziopharm had expected to turn Matisse into a mid-stage study, if Picasso were to fail.
"It was rather aggressive of them to go right to a late-stage study (in Matisse) because they used early-stage data as a bridge to the late-stage trial," he said.
The company expects to get survival data from Matisse by the middle of the second half of this year, for which Bernardino said he had high hopes.
"I think it will show efficacy and definitely show safety in the trial. A mid-stage study is a lower hurdle for the company, with less risk."
Ziopharm also said it would now focus more resources on its synthetic biology program, which creates DNA-based drugs that enable controlled delivery of genes producing proteins to treat cancer.
The program is testing a drug for the treatment of melanoma and breast cancer in two separate mid-stage trials.
Ziopharm shares fell 66 percent to $1.76 in early trading -- their lowest in more than three years.
(Reporting by Esha Dey and Vrinda Manocha in Bangalore; Editing by Maju Samuel, Sreejiraj Eluvangal)