It’s turned out to be a challenging 2018 for Anika Therapeutics’ new CEO Joseph Darling—and a failed phase 3 trial for lead pipeline drug Cingal won’t make his job any easier.

The study in patients with osteoarthritis of the knee compared the drug—which combines the cross-linked hyaluronic acid (HA) component in the company’s Monovisc product and steroid triamcinolone hexacetonide (TH)—to the steroid on its own, but failed to cut pain significantly after 26 weeks.

While Anika has a positive pivotal trial comparing Cingal with placebo already in hand, the latest miss means it will have to start negotiating with the FDA to see whether combining the two data sets can give it a shot at U.S. approval or additional trials will be required. Either way, it likely puts paid to its hopes of a mid-2019 FDA approval.

Trying to tease out a positive message from the data, Anika is pointing to greater pain reduction numerically "at every time point in the study" than was achieved in the placebo-controlled study, but investors seemed to be unswayed. Its shares were suspended yesterday in the buildup to the announcement but are down more than 20% in premarket trading.

Principal investigator Laszlo Hangody, M.D., Ph.D., of Semmelweis Medical School Budapest and Uzsoki Hospital in Hungary said that the trial had been affected by a stronger-than-expected benefit seen in patients on TH alone, something he said may be related to the drug’s longer duration of action compared to other steroids.

Cingal is already on the market in around 15 countries worldwide, having been approved in the EU and Canada, but opening up the U.S. market is seen as critical if Anika is to achieve its revenue aspirations for the product, which Darling says is its "most exciting near-term pipeline candidate" and a potential "game changer" in the osteoarthritis market.

"We remain fully committed to bringing this impactful OA solution to U.S. patients and physicians," said the CEO in a statement. The company has upward of 320 patients enrolled in a long-term extension study designed to test its pain-relieving efficacy out to nine months.

The setback comes after a tricky period for Anika, punctuated by a voluntary recall of three HA-based products because of shelf-life problems that could keep them off the market until the end of 2018, the temporary suspension of its CE mark for Monovisc (which is regulated as a medical device) in Europe, and pricing pressure.

Darling said recently that the CE mark suspension arose because of an administrative issue and isn’t related to the safety or efficacy of the product, and that it is expected to be resolved within weeks.