TUSTIN, Calif. (AP) -- The price of Peregrine Pharmaceuticals Inc. stock collapsed Monday after the cancer drug developer told analysts they should not rely on recently disclosed data about its lead product, the potential lung cancer treatment bavituximab.
The Tustin, Calif., company said that it discovered "major discrepancies" between some patient sample test results and treatment code assignments when it reviewed mid-stage trial data. The company is studying bavituximab as a second option for non-small cell lung cancer.
Peregrine shares had jumped Sept. 7 after the company said patients who were treated with bavituximab in a mid-stage clinical trial lived twice as long as patients who were treated with only a chemotherapy drug. On Friday the stock reached a three-year high.
But Peregrine said Monday investors should not rely on data from its mid-stage study that the company disclosed on or before Sept. 7. It discovered the discrepancies while preparing for a meeting with regulators. Peregrine said the source appears to be tied to an independent, third party it did not name that was contracted to code and distribute the product.
The company also said the issue won't have an impact on other on-going bavituximab studies.
Peregrine also is studying bavituximab as a primary treatment for lung cancer. It is conducting clinical trials of the drug as a treatment for cancers of the pancreas, liver, prostate, breast, and for the viral infection for hepatitis C.
Roth Capital Partners analyst Joseph Pantginis lowered his rating on Peregrine shares to "neutral" from "buy" and knocked his 12-month price target on the stock down to 70 cents from $9. He had raised that target to $9 from $5 after the Sept. 7 report.
"Today's news comes as a shock and we believe represents a major blow to confidence in the bavituximab program until the discrepancies can hopefully be worked out," the analyst wrote.
Pantginis also noted that there is no indication about the extent of the issue and whether it ultimately affects the drug's survival benefit.
Peregrine shares fell 78.5 percent, or $4.23, to end Monday at $1.16 in extremely heavy trading. More than 68 million shares changed hands Monday, versus a normal trading day of about 4.4 million. Broader trading indexes edged down slightly.
On Friday, shares of Peregrine peaked at $5.50, their highest price since May 2009. The stock traded as low as 39 cents in April.