(Reuters) - Israeli biopharmaceutical firm BioLineRx said it would stop a trial of its experimental schizophrenia drug after an interim analysis of study data showed the drug would not meet the main goal of improving cognitive functions, sending the company’s stock tumbling 58 percent to a life low.
The analysis showed that the drug BL-1020 - BioLineRx’s most advanced product - had no efficacy compared to Risperidone, an approved treatment for schizophrenia symptoms.
Aegis Capital analyst Raghuram Selvaraju said people had ascribed too much value to the drug and that the news was by no means a “death blow” to the company.
The next most advanced candidate in BioLineRx’s pipeline is drug to treat damaged cardiac tissue, which is currently in late-stage studies. The company also has drugs to treat inflammatory bowel disease and skin lesions in mid-stage trials.
“We continue to be bullish as they have a number of agents in mid-stage development. It is unfathomable to me that results from all of these will be negative,” Selvaraju said.
Termination of the study would reduce the company’s research and development expenses by about $6 million to $7 million for the rest of 2013 and a part of 2014, BioLineRx said in a statement.
The company said its current cash reserves of about $28 million would fund its operations into 2015.
Selvaraju said he expects the stock to bounce back in the next few months as uncertainty surrounding the schizophrenia drug fades, and lower research and development costs would mean the company would not have to raise more money from the market.
Schizophrenia is a brain disorder which affects about 2.4 million Americans, according to the National Institute of Mental Health.
Shares of the company were trading down 49 percent at $1.93 on the Nasdaq.
Reporting By Vrinda Manocha in Bangalore; Editing by Roshni Menon