(Adds information about the study, drug and company.)

By Thomas Gryta

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- GTx Inc. (NASDAQ-NMS:GTXI) (GTXI) released preliminary data from a Phase III trial of its Acapodene drug showing a reduction of multiple side effects from hormone therapy in men with advanced prostate cancer.

Shares of the Memphis drug developer rose 40.3%, or $5.19, to $18.08 on more than 30 times average daily volume. Earlier Monday, shares traded as much as 55% higher at $20.

In the study, Acapodene met its main goal of reducing osteoporosis-related vertebral fractures, a possible side effect of hormone therapy.

Hormone therapy reduces levels of male hormones, which stimulate prostate cancer cells to grow. Lowering their levels often makes prostate cancers shrink or grow more slowly.

GTx said the study found that Acapodene also improved other side effects, including bone mineral density, lipid profiles, and growth of breast tissue.

Wachovia analyst Aaron Reames said there was doubt from investors prior to the study's release, because the typically low incidence of vertebral fractures raised questions about whether the drug could show a statistically significant benefit.

Reames projects that Acapodene will get approval from the Food and Drug Administration in late 2008 or early 2009 and sees a $300 million sales opportunity for the drug.

GTx recently reported its fourth-quarter loss widened to $12.8 million, or 36 cents a share, from $4.7 million, or 15 cents, a year earlier, on revenue of $ 1.9 million.

Goldman Sachs analyst Meg Malloy boosted her 12-month price target on the shares to $30 from $28, and wrote that the safety profile of the drug "looks solid."

Reames expects more data coming out on the Acapodene in the coming weeks to see if it helps prevent the onset of prostate cancer. If the data are positive, the stock could be headed for another jump, he said.

"There are very few people, if anybody, that see the second trial as positive, " said Reames, who added he does believe the results will be positive.

Furthermore, Reames notes that GTx is in talks to license the Japanese rights to the drug. European rights have already been licensed to Ipsen (Euronext:1025915) (1025915.FR) and the company is not partnering in the U.S. market.

Last year, GTx signed a license agreement with Merck & Co. (NYSE:MRK) (MRK) for its selective androgen receptor modulators, which are drugs designed to treat a number of musculoskeletal disorders.

-By Thomas Gryta, Dow Jones Newswires; 201-938-2053; thomas.gryta@dowjones.com

    (END) Dow Jones Newswires   02-25-08 1337   Copyright (c) 2008 Dow Jones & Company, Inc.