AstraZeneca plc opted to discontinue development of the stroke drug NXY-059 after the product missed its primary endpoint in a Phase III trial, sending shares of Renovis Inc., the drug's licensor, plunging more than 70 percent Thursday.

The news also raised questions about the risk of developing neuroprotectant drugs in the area for ischemic stroke, a condition affecting about 2 million people every year, with only a small fraction of those able to receive existing therapy.

Data from the 2,300-patient SAINT II (Stroke-Acute Ischemic-NXY Treatment) trial failed to show a statistically significant reduction of stroke-related disability compared to placebo, as measured by the modified Rankin Scale. NXY-059, also known as Cerovive, missed its secondary endpoints as well, demonstrating no statistically significant improvement in neurological status, as well as no significant reduction in the incidence of symptomatic intracranial hemorrhage when administered with the thrombolytic agent rt-PA.

Those results were "totally unexpected," said analyst Elemer Piros, with New York-based Rodman & Renshaw. "It was a complete failure. There was absolutely no difference between [NXY-059] and placebo."

Renovis President and CEO Corey Goodman said in a conference call that the company was "shocked" by the negative outcome, particularly in light of "so many positive indications," including results from an earlier Phase III trial - the 1,700-patient SAINT I study reported in May 2005 - in which NXY-059 distinguished itself as the first neuroprotectant drug to reach its primary endpoint in a large-scale study. (See BioWorld Today, May 5, 2006.)

Investors fled the stock all day Thursday, with about 46.7 million shares traded, more than 122 times its normal daily volume. Shares (NASDAQ:RNVS) lost $10.77 to close at $3.43, a record low for the company that went public in February 2004 with an initial price of $12 per share. At that time, NXY-059 was just entering Phase III development. (See BioWorld Today, Feb. 6, 2004.)

The company is planning further analysis to determine why the two Phase III studies yielded such contrasting results, but Piros said it's unlikely the drug would continue to be developed in stroke.

With the Phase III failure, London-based AstraZeneca returned all rights for NXY-059 to Renovis. But even if Renovis decided to proceed on its own, the drug wouldn't reach approval for at least a couple of years. Meanwhile, the patents on NXY-059 start expiring in 2014, Piros said.

"AstraZeneca has dropped it, and I think Renovis will have to do the same," Piros told BioWorld Today.

Shares of AstraZeneca (NYSE:AZN), which also slipped on the disappointing SAINT II results, closed at $61.38 Thursday, down $4.99.

As damaging as the NXY-059's failure was to its developers, the ramifications might be equally damaging to the neuroprotectant space, which had been riding on the positive data from the first Phase III trial.

"There was a lot of optimism after that," said Phil Nadeau, an analyst with New York-based Cowen and Co. LLC. "It seemed like, for the first time, people started thinking that a neuroprotectant could be developed successfully."

But now, "we may have gone back to the drawing board," he said.

Piros agreed, and said AstraZeneca has indicated that it intends to stay away from the neuroprotectant field in the future due to its high risk, which could "be extremely bad news" for those who attempt to develop those drugs in the ischemic stroke indication.

Renovis' drug had been the most advanced, though a number of other firms are working on early stage products aimed at protecting cells injured during a stroke. Some of those include Rehovot, Israel-based D-Pharm Ltd.; Lausanne, Switzerland-based Xigen SA; South San Francisco-based FibroGen Inc.; Gaithersburg, Md.-based Panacea Pharmaceuticals Inc. and San Diego-based Ambit Biosciences Corp.

One of the stumbling blocks, Piros said, likely has to do with the lack of thrombolytic agents that work effectively in stroke patients. The only approved product is tPA, which has to be administered within three hours of the stroke.

"I personally wouldn't try developing another [neuroprotectant] until a clotbuster is approved," he said, and the most advanced thrombolytic in development is desmoteplase, from German firm Paion Deutschland GmbH, which could extend the treatment window to nine hours.

Desmoteplase is in Phase III development, although on Wednesday an FDA steering committee recommended the trial be placed on hold due to an undisclosed safety issue.

Meanwhile, for Renovis, the failure of NXY-059 cost the company much of its attraction for investors. The good news is that it has plenty of money in the bank: Renovis reported in its third-quarter earnings cash of $105 million, which is expected to last the company more than two years at its current burn rate.

The bad news, however, is that the rest of Renovis' drug pipeline is in the preclinical stage.

Piros said the company would have to consider merging with another company "that has a clinical-stage pipeline."

"That would help them regain credibility with investors," he said.

Renovis' CEO, Goodman, assured investors that the company would continuing advancing its internal products, while seeking in-licensing and acquisition opportunities to fill out its pipeline. It also will work to cultivate the ongoing collaborations with Pfizer Inc. and Genentech Inc.

Renovis signed a preclinical vallinoid receptor deal with New York-based Pfizer in 2005 to develop compounds for pain and urinary incontinence, and most recently received a $1.5 million milestone payment after Pfizer nominated a candidate for further development. (See BioWorld Today, June 1, 2005.)

The company is working with South San Francisco-based Genentech in a separate deal to discover and develop drugs that inhibit angiogenesis and promote nerve regrowth following nervous system injury.

Renovis had a net loss of $7.4 million, or 25 cents per share for the third quarter.