Faron Pharma Oy (LON:FARN) said its lead drug did not meet its goals for efficacy following the initial read-out from its phase III INTEREST study.
Chief executive Dr Markku Jalkanen said he and the company's R&D team are now "considering how we can advance Traumakine in clinical development".
Traumakine was used to treat acute respiratory distress syndrome (ARDS), a life threatening ailment caused by an inflammation of the lungs that usually coincides with illnesses such as pneumonia or severe flu.
The trial found the that at 28 days the median number of ventilator-free days for patients on the drug was 10 days, only slightly higher than the 8.5 days for those taking a placebo with no medical benefit.
Meanwhile, the mortality rate after four weeks was 26.4% for those receiving the Faron treatment and 23% for the placebo group.
CEO Jalkanen said he and his team was "incredibly disappointed and surprised" by the results, which were at odds with data garnered from an earlier trial.
"We need to further analyse the data in order to understand how this study differs from our previous positive results with ARDS patients, both in terms of Traumakine's efficacy, and in the unusually low mortality rate observed in the placebo arm," said Jalkanen.
He said the Faron team was looking forward to the results of a Japanese study of the drug due in the third-quarter, adding that the company will continue with its plans to advance its next asset, Clevegen, a potential cancer treatment.