The path to market for Genelabs Technologies Inc.'s lupus drug Prestara narrowed this week when another Phase III trial failed to meet the primary endpoint.

The study was conducted in Taiwan by Genelabs' Asian partner Genovate Biotechnology Co. Ltd. It was viewed as a backup to a pivotal U.S. study that failed last October.

Genelabs has an FDA approvable letter for Prestara (prasterone) to treat systemic lupus erythematosus, granted in 2002, but the company needed to confirm the results of the original 55-patient Phase III trial, study GL95-02, before gaining final approval. A 155-patient trial (GL02-01) and the 89-patient study in Taiwan (GBL03-00) have not fulfilled that requirement.

"After our trial in the U.S. failed, one of our thoughts was that if this Taiwan study was positive, there may be ways to go ahead and use that," said Matthew Loar, Genelabs' chief financial officer. "But that becomes less likely with these negative results."

For a company that traded at almost $3 a year ago, the news is devastating to investors. The stock (NASDAQ:GNLB) fell 24.6 percent Thursday, or 14 cents, to close at 43 cents. When the U.S. trial failed in October, the stock plunged 65 percent. (See BioWorld Today, Oct. 5, 2004.)

The study in Taiwan was a randomized, placebo-controlled, double-blind trial conducted at six medical centers to determine the effect of prasterone on bone mineral density of women with SLE who were receiving glucocorticoids. The therapy failed to demonstrate a statistically significant benefit compared to placebo on bone mineral density at the lumbar spine. The patients were treated for nine months.

Study GL02-01 also failed to show statistical significance on the bone mineral density endpoint. But the first Phase III, GL95-02, included a nested study that indicated that patients receiving Prestara had increased bone mineral density, compared to a decrease in bone density for patients on placebo.

Lupus has been proved by many companies to be a challenging indication. Last month, San Diego-based La Jolla Pharmaceutical Co. laid off 60 employees after learning that its treatment for lupus-related renal disease, Riquent, was unlikely to get accelerated approval. The company received an approvable letter for Riquent in October, but the FDA required completion of another study for final approval, delaying a potential launch until 2008. (See BioWorld Today, Oct. 18, 2004, and March 31, 2005.)

Lupus affects about 1 million people in the U.S. and Europe, and there have been no new drugs approved for the disease in 30 years.

That could give Genelabs an edge in its discussions with the FDA.

"We've got to finish the analysis of the Taiwan study before we know what we're going to do," Loar told BioWorld Today, "and after that we'll get together with the FDA and get their thoughts."

The FDA could hold its ground, requiring that second confirmatory study, in which case Genelabs would need to conduct another trial if it still wants approval. The FDA could require the second study and something else, based on findings from the two recently failed trials. Or the FDA could see something positive in the data and grant final approval.

"It's oftentimes difficult to try to predict what they're going to do at the FDA," Loar said.

Since October, Genelabs has studied the data of GL02-01 to determine why that trial did not confirm the first pivotal Phase III. In the second trial, the treatment duration was shorter and the patients were on higher doses of glucocorticoids. Loar said the company conducted its own analysis as to why the trial didn't reach its endpoints, and it commissioned a study by independent consultants for their opinion, but none of those findings are being publicly released at this point.

Prestara represents Genelabs' only internal clinical program. The company also is working on preclinical stage hepatitis C compounds, and formed a $46 million agreement for that indication last fall with Foster City, Calif.-based Gilead Sciences Inc. (See BioWorld Today, Oct. 1, 2004.)

Genelabs withdrew its European marketing authorization applications for Prestara (called Anastar in Europe) last June after the European Medicines Agency said the data would not support approval. The product is partnered with Corona, Calif.-based Watson Pharmaceuticals Inc. for North America, and with Osaka, Japan-based Tanabe Seiyaku Co. Ltd. for Japan. The agreement with Genovate was formed in 1995 for all Asian countries except Japan. Prestara is not partnered in Europe.