Shares in Nabi Pharmaceuticals have collapsed after the company revealed that its nicotine addiction vaccine NicVax has failed in a late-stage trial.

NicVax did not meet its primary endpoint in the company's first of two Phase III trials. A preliminary assessment of the trial data showed that subjects treated with the vaccine quit smoking at a similar rate of 11% compared to subjects who received placebo.

The study involved 1,000 patients and the primary endpoint was the abstinence rate for 16 weeks ending at 12 months. Nabi chief executive  Raafat Fahim noted that "we are in the process of assessing the reasons for these unexpected data, as we await the results of the second Phase III trial".

He added that the data from this second trial "may provide clues that could help explain the disappointing results from the first trial". In the meantime, Mr Fahim noted that the board of directors "is actively evaluating any and all appropriate strategic alternative actions to preserve shareholder value", and is looking to cut operational expenses.

This is clearly a major blow for Nabi, whose stock fell over 70%. The company signed a potentially lucrative licensing deal with GlaxoSmithKline in November 2009, when the latter made an upfront payment of $40 million. Nabi was eligible to receive over $500 million in various milestones, plus double-digit royalties.