Shares in Vernalis dropped nearly 20% on the London Stock Exchange yesterday morning as investors shrank back on news that the firm’s neuropathic pain drug failed in a mid-stage trial.

Vernalis said that V3381 (indantadol) failed to show any significant benefit to patients compared to placebo in a Phase IIb study evaluating its safety and efficacy as a treatment for neuropathic pain due to diabetes.

Although the study, which involved 271 patients, showed a 25% reduction compared to baseline in pain scores in those given V3381, there was also a marked reduction in the placebo arm, thereby erasing any significant difference between the two groups, the firm said.

The company said it is unlikely to carry out further studies with V3381 in neuropathic pain due to diabetes while full analysis of the primary and secondary data from the study is ongoing, but that it will complete the current pilot trial assessing the drug in the chronic cough indication.

Naturally Vernalis is disappointed with the trial’s outcome, particularly as the group had high hopes for bringing a treatment for neuropathic pain to market with a more favourable safety profile than existing options, such as Pfizer’s Lyrica (pregabalin). “We have consistently stated the highly risky nature of diabetic neuropathy studies but nevertheless are disappointed with the results of the IN-STEP study in this difficult to treat indication,” noted chief executive Ian Garland.

However, despite the setback Garland remained upbeat about the company’s future, flaunting its “broad portfolio of products in clinical trials addressing substantial market opportunities”. This, he said, combined with growing royalties on sales of its migraine drug Frova (frovatriptan) and significant cash resources, will fund the group for at least three years “at current research and development investment levels”, and continues to give Vernalis “strong potential for growth and value generation”.