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Alkermes (ALKS) - Get Alkermes Plc Report said Thursday that the experimental drug ALKS 5461 failed to improve depressive symptoms in patients with hard-to-treat depression, based on negative results from two late-stage clinical trials.

The bad news caused shares of Alkermes to fall 42% to $35 in Thursday trading.

The stock is falling hard because ALKS 5461 was touted by Alkermes as a potential blockbuster depression drug which would boost the company's revenue significantly and eventually lead to profitability in 2017 or 2018.

Alkermes argued Thursday that hints of efficacy in the failed clinical trials means ALKS 5461 isn't dead yet. A third phase III study in depression is still underway. But the bear market for biotech stocks means investors are more likely to take a skeptical view of ALKS 5461's future until the company can prove otherwise.

As reported by Alkermes Thursday, neither of the phase III studies met their primary endpoints -- a comparison of ALKS 5461 to placebo on the change from baseline on the Montgomery-Åsberg Depression Rating Scale (MADRS), a common measure of anti-depressive effect used in depression clinical trials.

All the patients enrolled in the studies had major depressive disorder that was no longer responsive to currently approved drugs. ALKS 5461 was an adjunctive treatment, meaning patients took the once-daily pill in addition to their currently prescribed anti-depression medicine.

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In one of the phase III studies known as Forward-3, a 2 mg dose of ALKS 5461 showed no treatment effect at all compared to placebo. Alkermes blamed this failure on a higher-than-expected placebo response.

In the second phase III study, Forward-4, Alkermes said the 2 mg dose of ALKS 5461 was more effective than placebo in reducing depression symptoms but not enough to reach statistical significance.

Based on this hint of efficacy, Alkermes is adding more patients and making other modifications to the ongoing Forward-5 clinical trial of ALKS 5461, the company said.

"We are steadfast in our commitment to developing new medicines for serious CNS conditions where there is a clear and compelling need for new treatment options for patients and their families," said Richard Pops, Alkermes CEO, in a statement. "Major depressive disorder is one of these conditions. We are building a large body of evidence supporting our belief in the clinical utility and the novel mechanism of action of ALKS 5461. We await the results of Forward-5 and will determine our next steps along the regulatory path with those results in hand."

Absent ALKS 5461, Alkermes future revenue growth will rely more heavily on the recently approved, long-acting schizophrenia drug Aristada, and Vivitrol, the company's injectable anti-addiction drug for opioid and alcohol abuse.

Alkermes has two other drug in late-stage clinical trials: ALKS 3831 in schizophrenia and ALKS 3800 in multiple sclerosis.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.