NEW YORK (TheStreet) -- Ketamine -- a drug used in anesthesia -- is making a lot of patients happy with its ability to treat depression, although it hasn't been approved by the Food Drug and Administration for that use.

Three recent positive studies, including a small one last week, should spur more research into ketamine and boost the already fast-growing, off-label infusion business.

Clubgoers have long used the street version, dubbed Special K, and veterinarians have used it as an anesthetic for decades. But does a recreational drug and horse tranquilizer really have potential as an effective treatment for one of the toughest, and most common, psychiatric illnesses out there? Recent history says possibly.

In fact, the FDA is encouraging development of this medication, granting fast-track status for some ketamine-like drug candidates. And desperate, treatment-resistant patients are lining up for one-hour infusions in doctors' offices all over the country.

Just how does ketamine work for depression? The theory is that it may block the effects of the neurotransmitter glutamate, on N-methyl-D-aspartate (NMDA) receptors, in the brain, somehow triggering intracellular pathways to create more synaptic connections. Restoring these connections may ease depression. It is as good a theory as any; scientists don't really fully understand how any antidepressants work.

Drug companies are making a play, but their versions of ketamine are years away from the clinic and not without recent failure. AstraZeneca (AZN) - Get Report had an NMDA channel blocker in phase II trials that was pulled after disappointing results.

Development is speeding up, however. Last month, the FDA gave Naurex, a small drug-development company, fast-track status for its ketamine-like drug, an infusion in Phase II trials.

Last November, Cerecor, another small privately held biopharmaceutical company, also got fast-track status from the FDA for its depression treatment in Phase II trials.

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Plus, two other glutamate-based agents are in development for depression by Roche (RHHBY) . And Johnson & Johnson (JNJ) - Get Report, has esketamine, an intranasal form of the drug, in phase II trials. Nasal delivery would be a big winner.

One would think it would be hard to make money off of a drug like ketamine that has been around for almost 50 years. But with the dearth of depression treatments that actually work and with drug companies shying away from developing new drugs that treat psychiatric  disorders, ketamine, with its long history as an anesthetic, is getting a hard look.

Research and current real-life, off-label use of the drug shows that most depressed patients definitely feel effects when ketamine starts flowing into their veins. Right away. This in contrast to the standard antidepressant pill, which can take four to six weeks to work, and even then, not often all that great.

Here's how treatment works: A small dose is infused into a patient over 40 minutes. After about 10 minutes, patients report feeling as if the weight of their depression is being lifted so much so that they are levitating, flying, floating above the bed.

People come down from the intense high in about two hours, but the antidepressant effects stick around long after the relatively short half-life of two to four hours -- as long as four weeks, in some published trials. All effects seem to wear off after a while, though, and patients likely have to come back for new infusions every few weeks. At say, $500 or more a pop. Nice repeat business.

One start-up company, Ketanetics, is creating a network of physicians who offer their "ketamine-based treatment algorithm" to help "physicians quickly incorporate ketamine-infusion therapy into their practices." The Newburyport, Mass.-based company is co-founded by well-known psychiatrist Keith Ablow, who has appeared as an expert on many national television programs, such as Dr. Oz, Oprah and the O'Reilly Factor.

If ketamine is a success, it may encourage scientists to look outside the lab, and into dance clubs, veterinary clinics -- and even the streets -- for the next blockbuster drug.

At the time of publication, the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.