Updated from 10:01 a.m. EST

Eye-care company

OccuLogix

(RHEO)

had two-thirds of its market cap erased Friday after its proposed procedure for treating vision loss failed to meet the main goal of a late-stage clinical trial.

The Ontario-based company's stock was plunging $8.43, or 66%, to $4.32 at midday, and shares of OccuLogix were changing hands at a furious pace. Around 12:10 p.m. EST, 16 million shares had been traded, more than 32 times the average volume for a full session in the last three months.

According to a preliminary analysis of phase III trial data, the experimental Rheo procedure failed to reach its primary efficacy endpoint. The Rheo was being studied as a potential treatment for the dry version of a condition called age-related macular degeneration. OccuLogix attributed the result to "an anomalous response" of patients in the placebo group.

OccuLogix did say that the group treated with the procedure demonstrated a positive response. Phase III marks the final stage of clinical trials conducted just before a product or drug is submitted for Food and Drug Administration approval.

TLCVision

( TLCV), which owns 51% of OccuLogix, was also getting hammered. Lately its shares were down $1.95, or 24.6%, to $5.98 in heavy trading.

About 90% of AMD cases are the dry form of the disease. OccuLogix's Rheo procedure would have been the first treatment for the condition. Several other treatments for dry AMD are currently in development, ranging from nutritional supplements to laser surgery.

The dry form of AMD is less severe than the wet type of of the disease, but in some cases dry AMD can progress to the wet form. AMD is the leading cause of vision loss among people 60 and older, according to the National Institutes of Health.

AMD affects the macula, or central retina, the part of the eye that allows people to see light, form and color. The disease is caused by a hardening of the arteries that feed the retina, leading to a decline in vision. With the less-common wet form of AMD, new vessels form as the body tries to improve the supply of blood to the eye's retinal tissue. These vessels can break, causing bleeding and tissue damage.

During the Rheo procedure, blood is drawn from a patient, filtered of certain proteins and fats, then redelivered into the body, supposedly allowing the blood to flow more freely, especially in the macula.

AMD has been in the headlines for several months, but mostly because of the wet variety.

Genentech's

( DNA) Lucentis, a treatment proposed for wet AMD, was shown to be more effective than the

QLT

(QLTI)

and

Novartis

(NVS) - Get Report

drug Visudyne in clinical trials. Lucentis has actually improved vision in some patients.

OSI Pharmaceuticals

( OSIP) also has a wet AMD drug, called Macugen, that it inherited when it acquired Eyetech Pharmaceuticals. Macugen, which has been proven to stop vision loss, received regulatory approval in Europe this week.