(Reuters) - Derma Sciences Inc said it would stop tests on its only drug in development after an outside assessment showed the drug was unlikely to heal foot ulcers caused by diabetes.

The company's shares slumped about 25 percent premarket on Thursday.

Derma Sciences, which already has drugs on the market, said it will also stop developing the drug, aclerastide, as a treatment to reduce scars and for radiation dermatitis.

An independent data monitoring committee conducted a futility assessment test on the drug and found it was unlikely to work and suggested Derma Sciences stop enrolling patients for late-stage studies. The assessment showed the drug was safe.

Foot ulcers due to diabetes is common and disabling and, despite treatment, they easily become chronic wounds and could even lead to amputation.

Roth Capital Partners analyst Scott Henry said the news was unexpected. He had given the drug a 50 percent chance of success.

"We give zero value to this program going forward," Henry said.

Macrocure Ltd had announced last month that its cell therapy had also failed a late-stage study in patients with the hard-to-treat chronic wound.

Princeton, New Jersey-based Derma Sciences' shares were down at $4.35 in premarket trade on Thursday.