Shares of Peregrine Pharmaceuticals Inc. sank Thursday after the drug developer said it will stop studying a treatment combination involving its potential lung cancer drug bavituximab.

THE SPARK: The Tustin, Calif., company said a combination of bavituximab, carboplatin and a chemotherapy drug labeled paclitaxel did not produce a meaningful enough difference in overall survival in patients compared with carboplatin and paclitaxel alone. The company had just completed an analysis of data from a mid-stage study of the drug.

Peregrine said the combination involving bavituximab did produce an average overall survival of 14 months.

THE BIG PICTURE: Peregrine still plans to start a late-stage study by the end of the year of bavituximab combined with another chemotherapy drug, docetaxel. That combination will be delivered to patients with a form of lung cancer who have already tried another treatment.

Peregrine does not have any approved products, and bavituximab is its most advanced experimental drug. The company had more than $42 million in cash as of June 24. It said it has enough cash resources to fund operations for at least the next 12 months.

SHARE ACTION: Down nearly 25 percent, or 38 cents, to $1.17 in heavy trading Thursday morning, while broader indexes climbed about 1 percent. The stock closed Wednesday up 18 percent since the start of the year.