Two weeks ago shares of Peregrine Pharmaceuticals ( $PPHM ) skyrocketed on the upbeat survival data it released from a mid-stage study of its lung cancer drug bavituximab. This morning the share price disintegrated after the biotech said the data were unreliable, blaming an unnamed outsourcer for "major discrepancies" found in the distribution of clinical trial supplies used in the study.

Within minutes Peregrine's shares tumbled 80%.

"As part of the trial's execution, Peregrine contracted with independent third-party contractors to execute treatment group assignments and oversee clinical trial material coding and distribution according to established procedures," Peregrine announced in a release. "A subsequent review of information has determined that the source of these discrepancies appear to have been associated with the independent third-party contracted to code and distribute investigational drug product."

Biosimilar regulations and CMOs

Webinar: Now available on-demand

Biosimilar legislation passed in 2010 guaranteed 12 years of patent protection to biotechs from biosimilar competition. But passing the law was the easy part. As FDA hashes out regulations to implement the law, we help CMOs understand the significance of the legislation to their businesses and how the new legislation may help, or hurt, contract manufacturing for biologics. Register Now!

As FierceBiotech reported on September 7 , Peregrine had reported that non-small cell lung cancer patients in the experimental drug arm lived for a median 12.1 months. In the chemo arm, the survival rate was about half that. But the progression-free survival rate was only 4.2 months, causing a number of analysts to question the data on Twitter as they compared a high OS rate with a low PFS. Peregrine enrolled 121 patients for the study. Peregrine also took a beating back in March, when the PFS rate it tracked on bavituximab came close to the rate tracked in the placebo group.

The biotech said it became aware of the discrepancies in the study as it began to prepare for a post-study sit-down with the FDA. Peregrine had been investigating bavituximab as a potential second-line treatment for non-small cell lung cancer. And Peregrine added that the dark cloud now hanging over its Phase II trial would have no impact on other ongoing studies.

- here's the press release

Related Articles:
Peregrine soars on promising survival data for lung cancer drug
Disappointing cancer data triggers sharp drop in Peregrine shares
Peregrine posts promising data on Phase II lung cancer trial
Peregrine shares jump after drug demos brain cancer efficacy