Shares of Columbia Laboratories Inc. lost more than two-thirds of their value on news that its progesterone gel failed to reduce the incidence of preterm birth in a Phase III study.

Results from the 611-patient trial showed no difference between Prochieve 8 percent progesterone gel over placebo in preventing preterm birth at week 32 in women with a previous preterm birth earlier than 35 weeks gestation. The mean gestational age at delivery was about 37 weeks in both groups, which marked an improvement from the average 30 weeks in the previous preterm birth for both groups.

"Unfortunately, the results were disappointing but definitive," Robert Mills, president and CEO of Livingston, N.J.-based Columbia Labs, said in a conference call. He attributed the improvement in both the active and placebo groups to an "increase in the level of prenatal care."

Columbia Labs' stock (NASDAQ:CBRX) plummeted 68 percent, losing $3.13 Monday to close at $1.48.

If there was any good news from the trial, Mills said, it was that the failure was not "a delivery issue." The company's Bioadhesive Biodelivery System, which uses bioadhesion to administered drugs in a targeted fashion over a 12- to 72-hour period, "successfully delivered progesterone. It just didn't show what we hoped it would."

In addition to missing its primary endpoint, the study showed no difference between the Prochieve and placebo groups in the secondary endpoints, which measured the preterm birth rate at weeks 28, 35 and 37. Mills said detailed data would be reported at a future scientific conference.

Had the Phase III results been positive, Columbia Labs likely would have filed a new drug application to expand the label of Prochieve, which previously gained approval for secondary amenorrhea and as part of an infertility regimen in women with progesterone deficiency.

With Prochieve out of the running in the preterm birth indication, investors wait to see whether its chief competitor, Adeza Biomedical Corp.'s Gestiva, can clear regulatory hurdles. The FDA deemed Gestiva approvable in October, but requested an additional animal study, sending shares of the Sunnyvale, Calif.-based company (NASDAQ:ADZA) down 16 percent to $14.99. (See BioWorld Today, Oct. 24, 2006.)

Gestiva, a synthetic progestogen, 17-alpha-hydroxyprogesterone caproate, got orphan drug designation last month for the prevention of preterm birth in women with a history of premature delivery. That would guarantee the drug seven years of marketing exclusivity in the U.S. upon approval.

For Columbia Labs, Mills said the plan for 2007 is to focus on "building our existing infertility business," which includes Crinone 8 percent progesterone gel to which the company acquired U.S. rights in December from Geneva-based Serono SA. Crinone is approved for infertility and amenorrhea.

The company plans to seek a partner for Striant, its marketed testosterone buccal system for hypogonadism in men, hoping that a bigger sales staff will be able to penetrate more of that market.

In its development pipeline, Columbia Labs continues work on its lidocaine vaginal gel, which is approaching late-stage development in the prevention and treatment of dysmenorrheal and pelvic pain.

The company, which has not yet reported its fourth-quarter earnings, posted a net loss of $2.6 million, or 5 cents per share, for the third quarter of 2006. As of Sept. 30, Columbia Labs had cash and cash equivalents totaling $4.1 million, though the company added about $40 million in gross proceeds through a private placement of convertible notes late last year.