Drug developer GlobeImmune Inc said its experimental hepatitis B drug did not reduce infection in patients after 24 weeks of treatment in a mid-stage study, sending the company's shares down as much as 60 percent to a record low.
GlobeImmune, which is developing the drug with Gilead Sciences Inc, is among several drugmakers looking to tap the demand for hepatitis B treatments as hepatitis C drugs flood the market.
Hepatitis B is being seen as the next big opportunity in the liver disease market as it is the most common liver infection, affecting about 400 million people worldwide.
However, hepatitis B infection is much more difficult to treat than hepatitis C.
GlobeImmune, which had a market value of $47 million as of Tuesday's close, is developing three other drugs for infectious diseases and five for different types of cancers.
In the trial, the company's hepatitis B drug, GS-4774, was tested in 178 patients who were already on oral antiviral treatment.
Gilead's liver drugs portfolio includes its blockbuster hepatitis C drug Sovaldi and Harvoni and the company has another hepatitis B candidate, GS-9620, in its pipeline.
With GS-4774 failing the study, Gilead would have to look at other drug developers to find the right hepatitis B drug for its portfolio, analysts said.
Other companies developing hepatitis B drugs include Arrowhead Research Corp, Canada's Tekmira Pharmaceuticals Corp , Isis Pharmaceuticals Inc and Assembly Biosciences Inc.
"(Gilead)... is probably watching two leading albeit early players in Hep B: Tekmira and Assembly Biosciences," RBC Capital Markets analysts wrote in a note.
GlobeImmune's shares were down 51.7 percent at $3.98 in noon trading on the Nasdaq on Wednesday.
The stock, which was the top percentage loser on the exchange, hit a record low of $3.33 earlier in the session.