The lead drug candidate for Tranzyme Pharma (Nasdaq: TZYM) failed in a Phase 3 clinical trial, and the RTP-based firm is stopping work on a new drug application, the company said early Monday.

The news sent Tranzyme shares down more than 60 percent as the markets opened later, from a $5.09 close on Friday to an opening price of $1.83.

Share prices rallied the rest of the day to close at $2.90.

Tranzyme hosted a conference call to discuss the results and their implications, the news apparently helping boost the stock price. Read MedCity News coverage here.

Tranzyme went public in 2011 and recently raised $9.3 million in debt financing.

Its drug candidate ulimorelin was to treat post-operative gastrointestinal problems. The drug failed to meet primary and secondary efficacy goals, Tranzyme said. A second phase 3 trial will continue, the company added.

“These results are surprising and disappointing,” Chief Executive Officer Vipin Garg said in a statement. “While we are still planning to analyze the data from the second phase 3 trial ULISES 008, which we expect by the end of the second quarter, we are stopping all other NDA activities for ulimorelin.

“We are now focusing on our oral drug TZP-102 which is currently in a phase 2b trial for the treatment of diabetic gastroparesis,” he added. “In this trial, we are looking for improvement in upper GI symptoms over a 12-week treatment period.”

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