Curagen’s shares slid nearly 35% yesterday on news that it has dropped development of velafermin for the prevention of severe oral mucositis following a poor performance in mid-stage trials.

A randomized, double-blind, placebo-controlled Phase II trial of the drug failed to meet its primary endpoint of lowering in the incidence of severe oral mucositis in patients receiving 30 mcg/kg velafermin compared to placebo.

Expressing his disappointment, Timothy Shannon, President and Chief Executive Officer of CuraGen, said the group would terminate development of the drug, and would now focus on progressing its other lead development projects.

"We continue to aggressively focus on our goal of advancing the belinostat and CR011-vcMMAE programs toward initiation of Phase III development in 2008, and we look forward to presenting updated clinical trial results on these programs in October at the AACR-NCI-EORTC conference, and in December at the ASH Annual Meeting," he said.