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UPDATE 3-Cytokinetics sinks on abandoning ALS drug after failed trial

(Adds analysts comments; updates shares)

Nov 21 (Reuters) - Cytokinetics Inc shares plummeted nearly 40 percent on Tuesday after the drugmaker said it will stop developing one of its treatments for ALS, which afflicts Stephen Hawking, after the drug failed in a key trial.

The company said it would focus on its second drug for ALS, also called Lou Gehrig's disease, but at least one analyst said the high rate of dropouts from the trial on the failed drug might not bode well for the other drug.

ALS (amyotrophic lateral sclerosis) is a fatal condition that affects nerve cells in the brain and the spinal cord. Deaths and disability in patients are strongly related to respiratory failure, according to Cytokinetics.

ALS garnered international attention in 2014 with the "Ice Bucket Challenge", in which people poured ice-cold water on themselves, posted a video on social media, and donated for research on the disease.

Cytokinetics said its drug, tirasemtiv, failed to show a statistical significant difference, when compared with a placebo, in lowering the 'slow vital capacity' of the lungs, or the volume of air expelled without force.

The drugmaker said more patients given tirasemtiv dropped out of the late-stage trial, than patients given a placebo, as they could not tolerate certain side effects, which the company said were not serious.

The trial was Cytokinetics' best shot at success, H.C. Wainwright analyst Joseph Pantginis said, adding tirasemtiv's failure could give a "perception knock" to CK-2127107, the company's other ALS drug.

While tirasemtiv's high dropout-rate was due to certain side effects, such as dizziness, they would likely not be felt with CK-2127107, according to Pantginis and Cantor Fitzgerald analyst Mara Goldstein.

Cytokinetics Chief Executive Robert Blum was also confident on the prospects of its second drug, which the company is developing in collaboration with Japan's Astellas Pharma Inc .

"We believe CK-2127107 will be better tolerated and potentially more effective than tirasemtiv," Blum said in a statement.

Mitsubishi Tanabe Pharma Corp's ALS drug was the first to win regulatory approval in the United States in more than two decades in May.

French drugmaker AB Science SA's masitinib is under European review after positive data from a late-stage trial earlier this year.

Cytokinetics' shares were at $7.62 in late morning trading, down about 31 percent and set for their biggest one-day drop since April 2014. They hit a one-and-a-half year low of $7. (Reporting by Divya Grover in Bengaluru; Editing by Savio D'Souza)