Human Genome Sciences Inc. said its second Phase III trial of Albuferon in chronic hepatitis C achieved its primary endpoint, but the data weren't strong enough to convince investors, and the stock nosedived 67.7 percent.

The company said Albuferon (albinterferon alfa-2b) in combination with ribavirin in treatment-naive patients with genotype 1 chronic hepatitis met the primary endpoint of noninferiority to peginterferon alfa-2a (Pegasys, F. Hoffmann-La Roche Ltd.).

Nevertheless, Rockville, Md-based HGSI said it plans to file global marketing applications next fall, and "assuming licensure, we believe Albuferon could become a market-leading treatment for chronic hepatitis C," President and CEO H. Thomas Watkins said in a statement.

The trial, ACHIEVE 1, compared Albinterferon alfa-2b 900-mcg every two weeks against weekly injections of peginterferon alfa-2a 180-mcg every week.

Topline results showed that albinterferon alfa-2b met its primary efficacy endpoint of noninferiority, with 48.2 percent (213/442) of patients achieving sustained virologic response (SVR) in the 900-mcg albinterferon alfa-2b treatment group, vs. 51 percent (225/441) in the peginterferon alfa-2a treatment group.

The primary analysis, which is adjusted for baseline stratification factors, showed a difference in SVR rates of -1.8 percent (95 percent CI -8.1 percent, 4.5 percent, p = 0.0008 for noninferiority).

The data also showed patients receiving Albuferon had comparable rates of serious or severe adverse events, vs. peginterferon alfa-2a, with 24 percent (106/442) in the albinterferon alfa-2b 900-mcg treatment group, vs. 23.1 percent (102/441) in the peginterferon alfa-2a treatment group.

While the adverse event data were a plus, the weakness of the data was that Albuferon actually performed below the results for Pegasys, Piper Jaffray analyst Edward Tenthoff pointed out in a research note.

"From our conversations with treating physicians, SVR rate is the key prescribing criteria. We believe with a numerically inferior SVR rate, Albuferon will have difficulty unseating market leader Pegasys," he wrote. "Albuferon's sole benefit is now less frequent dosing, which given shorter duration of therapy, may be less important for treating physicians."

He projected that Albuferon will gain approval next year, but estimated its long-term market share would top out at 35 percent for HGSI and partner, Basel, Switzerland-based Novartis AG.

Shares of HGSI (NASDAQ:HGSI) dropped $1.15, to close at 55 cents.