Updated from 2:08 p.m. ESTIsis Pharmaceuticals ( ISIS) dropped 22% Friday after a sell-side analyst issued a downgrade note in which he claims that the biotech firm's key cancer drug failed a late-stage clinical study. UBS biotech analyst Andrew Gitkin cut his rating to reduce from buy based on his belief that a phase III clinical study of Isis' drug Affinitak is not showing any significant benefit in lung cancer patients. Isis is expected to release results from this study in the first quarter of 2003. "Our downgrade reflects heightened concerns regarding the impending release of phase III data for Affinitak," Gitkin wrote. "Recent conversations with investigators involved in the trial have not supported or increased our confidence about a successful outcome to this trial." Gitkin's firm has a banking relationship with the company. After the close of Friday trading, Isis issued a statement saying that results from the Affinitak study have not yet been analyzed, and in fact, the data remains "blinded" to the company. But what Isis failed to explain in its statement is that the study is "open label," which means that doctors and patients know who is getting Affinitak and who isn't. Gitkin's negative call on the study's outcome resulted from conversations with doctors, not from anything obtained from the company. Isis shares closed off $1.72, or 22%, to $6.19 in Friday trading. The stock moved up to $7 in after-hours trading. Affinitak is a somewhat controversial drug because it relies on an unproven technology called antisense. These kinds of drugs are actually snippets of genetic code that work by infiltrating cells and preventing the expression of certain harmful proteins. In Affinitak's case, it is designed to inhibit a protein that's believed to play a role in the development and growth of cancer cells. The 600-patient, phase III trial was designed to see if a combination of Affinitak and chemotherapy would be more effective than chemotherapy alone in patients with recently diagnosed, or first-line, non-small cell lung cancer. In August 2001, Eli Lilly ( LLY) signed a partnership deal with Isis to codevelop Affinitak. At that time, the deal was seen as a validation of the antisense technology. Along with Isis, shares of Genta ( GNTA) closed down 6% to $9.70 Friday because the company is also trying to develop an antisense cancer drug dubbed Genasense. Genta will be presenting some midstage test data on Genasense at the American Society of Hematology meeting taking place this weekend.