Shares in Galapagos have taken a bashing this morning after the Belgian biotech revealed that a mid-stage investigational arthritis treatment has failed.

The company says it will discontinue a Phase II trial for GLPG0259 in rheumatoid arthritis "based on the outcome of a planned interim analysis". A committee of "key opinion leaders in the field of rheumatology" analysed unblinded safety and efficacy data from the first 30 patients, and while no serious adverse events or safety signals were reported, they recommended that the study be pulled due to "limited efficacy potential".

Galapagos stated that it intends to complete a full analysis of the data package prior to making a decision on the next steps for GLPG0259, including the position of the compound in other indications. Chief executive Onno van de Stolpe said "The innovative trial design used in this Phase II trial enabled quick determination regarding GLPG0259's potential efficacy in RA".

The Mechelen-based company notes that it has four novel mode-of-action molecules currently in late-stage discovery under its RA pact with Johnson & Johnson unit Janssen Pharmaceutica. Under the terms of that deal, signed in 2007, the latter has the exclusive option to license each programme for 60 million euros "upon delivery of a Phase IIa results package", so the failure of GLPG0259 is a clear blow.

Investors certainly think so and at 10.55 am (UK time), Galapagos shares had fallen almost 23% to 9.41 euros.