London: Aerovate Therapeutics said on Monday it was scrapping the late-stage development of its lead experimental drug to treat a rare lung condition after it failed on key goals in a mid-stage study, sending shares down more than 90%.The drug developer's sole product, called AV-101, did not help improve blood flow from the lungs to the heart in patients with pulmonary arterial hypertension (PAH), across all three tested doses, compared to the placebo. PAH is caused by a constriction of arteries in the lungs, leading to high blood pressure and symptoms such as shortness of breath, chest pain and dizziness.

It affects about 40,000 people in the United States. PAH makes the heart work harder to pump blood and can lead to heart failure.Current treatment options include Merck's Winrevair, which was recently approved by the U.S. Food and Drug Administration. Treatment with AV-101 did not result in meaningful improvements in how far the patients could walk in six minutes, which was a secondary goal of the study. The drug also failed across several other secondary goals, Aerovate said.AV-101, a dry powder formulation, is given directly into the lungs of the patients.

It is designed to stop disease-causing cells to rapidly multiply. Based on the data, the Massachusetts-based company said it was stopping enrollment and shutting down the late-stage and long-term extension studies for the drug.Detailed data from the mid-stage study will be released at a later date, Aerovate said. "Clearly, this is a worst-case scenario for Aerovate's shares," said Wedbush analyst Laura Chico, adding that shares will trade down to cash levels as management explores next steps. Aerovate said it had about $100 million in cash and equivalents as of June 15.

Shares hit a record low of $2.18 in early trading on Monday. Subscribe to our newsletter to get latest insights & analysis.