Bavituximab is being tested for multiple cancers, but the company earlier made the strategic decision, with input from the Food and Drug Administration, that lung cancer was the best near-term opportunity for approval. The drug is in the second of three studies generally needed for U.S. market clearance. The problems with the lung cancer trial were discovered as the company was preparing to meet with the FDA about its research, Peregrine said.

Specifically, the company said it discovered major discrepancies between patient sample test results and patient treatment code assignments. It blamed a vendor hired to code and distribute the drug in the trial. That vendor was not named in the company's news release Monday.

The news throws everything into question for bavituximab, even though the company says it shouldn't affect any other study of the drug. Investors were counting on bavituximab to continue through the regulatory process with additional success for lung cancer.

What's more, CEO Steven King said a number of companies were interested in partnering with Peregrine to pay for additional studies of the drug in lung cancer patients. That now also appears to be in question.