LOS ANGELES (AP) - Biopharmaceutical company CytRx Corp. said Monday a mid-stage study of its Lou Gehrig's disease treatment candidate showed the drug was well tolerated, and it plans to continue development.

However, shares of the company tumbled because the drug had no effect on disease progression.

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The goal of the Phase IIa clinical trial was to study the safety of arimoclomol in treating the disease, also called amyotrophic lateral sclerosis. The 10-center, double-blind and placebo-controlled study dealt with three dose levels given three times daily for 12 weeks and involved 84 patients. But the study showed there was no statistical significance in treating the disease.

The company said it expected that result, based on the study design's scale and scope, which was focused on safety and tolerability, not efficacy.

Shares of CytRX fell 46 cents, or 25 percent, to $1.37 as trading volume surged to more than four times its three-month average. The stock has traded between 85 cents and $2.30 over the last 52 weeks.

No statistically significant increases in adverse events were reported as compared with placebo. CytRx said it will continue on with a Phase IIb clinical trial, which will focus on the drug's effectiveness in treating the disease. It hopes to start that study in the first half of 2007.

"The results of the Phase IIa trial are encouraging for the future development of arimoclomol in that even the highest dose was shown to be safe and well tolerated in a patient population that has virtually no treatment options," said Jack Barber, senior vice president of drug development, in a statement.

Secondary endpoints, or measurements, of the study, also showed the drug was well absorbed by the body, specifically, by passing the blood-brain barrier. Preliminary analyses shows the drug entered the cerebral spinal fluid effectively, marking the breaking of an important barrier for drugs intended to treat neurodegenerative diseases.

The Phase IIb clinical trial, which is still in a planning stage, will likely involve about 390 patients at between 30 and 35 clinical sites.

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