Neurogen Drops on Arthritis Study

Neurogen (NRGN Quote) shares plunged 18.9% after the Connecticut-based drugmaker announced that preliminary testing of its rheumatoid arthritis treatment failed to live up to expectations.

The company late Tuesday announced that a study of NGD 2000-1, its arthritis treatment, did not show any change to C-reactive proteins, which are a biomarker of disease activity, when compared to a placebo. The news eliminates another potential avenue of growth for NGD 2000-1, which is a C5a antagonist, designed to disrupt C5a molecules, which are thought to cause a number of inflammatory disorders, including asthma.

"While data from the study are still coming in and will require further analysts, the preliminary data we have today indicates that we would need to develop NGD 2000-1 at does levels that would not permit a sufficient therapeutic window," said William Kostler, president and CEO of the company, noting the drug could potentially interact with other drugs.

In reaction to the news, Neurogen shares dropped $1.76 to $7.55 on twice their usual daily volume just 30 minutes into the session. Pacific Growth Equities, one of the few brokerages to cover the company, downgraded Neurogen to underweight from equalweight. (PGE does and seeks to do business with the companies covered in its research reports.)

The clinical failure of NGD 2000-1 is another setback for Neurogen, which saw another test of the drug show no improvement in asthma sufferers earlier in the year.