* Phase IIb trial shows no meaningful benefit
* Glenmark shares fall 17 pct to lowest in over a month
* Failure could deter potential Glenmark partners
* Drug still being tested to treat asthma (Recasts, adds analyst, company comment, details on Glenmark pipeline, shares, changes dateline from NEW YORK)
By Swati Pandey and Pratish Narayanan
MUMBAI, Aug 19 (Reuters) - India's Glenmark Pharmaceuticals (GLEN.BO) and U.S. partner Forest Laboratories FRX.N said a drug they were developing to treat smoker's cough failed in a mid-stage trial, knocking Glenmark shares down more than 17 percent on Wednesday.
The Indian firm had been banking heavily on the drug's success, and its breakdown means it will miss out on a potentially lucrative multi-billion dollar market, analysts said.
The drug was to treat chronic obstructive pulmonary disease (COPD), a persistent blockage of airways caused by emphysema or chronic bronchitis that affects an estimated 14 million Americans and is the fourth most common cause of death.
"The company had been depending a lot on this molecule. The COPD market is worth about $5 billion, and now that market has been totally wiped out for Glenmark," said Bhawana Verma, an analyst at K.R. Choksey Shares & Securities.
Glenmark and Forest said a Phase IIb study meant to determine the best appropriate dosing for the medicine, called oglemilast, did not show statistically significant results.
By 0841, shares in Glenmark were down 13.5 percent.
"Everybody had built in some kind of an upside because of commercialisation of this molecule," said Sarabjit Kour Nangra, analyst with Angel Broking.
"So, once there is no visibility or lesser visibility in terms of those coming through, the stock is taking a knock. The shares depend on how the R&D unfolds from here."
Glenmark has two other drugs in mid-stage trials: one to treat Type II diabetes, and one for osteoarthritic pain, incontinence and neuropathic pain, according to the company's website.
It also has several other molecules, including those to treat rheumatoid arthritis, obesity and cardiovascular disorders, that are in earlier-stage trials.
K.R. Choksey's Verma said Glenmark could find it difficult to draw a bigger partner in the wake of oglemilast's failure, further putting pressure on its shares.
"Big multinationals may think twice about partnering with Glenmark because of this failure," said Verma, noting pharmaceutical giants were looking to keep their costs in check and would not want to risk spending on drug development only to see the compound fail in later-stage trials.
"We need to re-evaluate whether the trial was designed appropriately, what were the shortcomings ... we need to internally analyse all that," Glenmark Managing Director Glen Saldanha told a conference call.
Oglemilast did not show a statistically meaningful benefit, compared with a dummy drug, in a 12-week study that evaluated three doses of the medicine in patients with moderate to very severe forms of the ailment, Forest and Glenmark said.
The study involved 428 patients at least 40 years of age with a history of 10 or more pack-years of smoking.
Forest said oglemilast is still being studied to treat asthma, with clinical trial results expected in the first calendar quarter of 2010.
"Clearly, there is no oral therapy for asthma. The market opportunity still continues to be very, very large. There is still a significant opportunity, not just for emerging markets but the world over," Saldanha said.
The leading treatment for COPD, Pfizer Inc's (PFE.N) Spiriva, is well on its way to becoming a $4.85 billion-a-year product by 2015, according to Cowen and Co.
Shares in Forest Labs last traded down 1.1 percent at $27.43. (Additional reporting by Ransdell Pierson in NEW YORK) (Editing by Ramya Venugopal & Ian Geoghegan)