DepoMed ( DEPO) shares nosedived Tuesday after the specialty pharmaceutical company announced that a phase III clinical trial for Gabapentin didn't meet its primary endpoint.

The Menlo Park, Calif., company's investigational extended release tablet was intended for treatment of neuropathic pain, specifically patients with postherpetic neuralgia, or a persistent pain due to nerve damage after shingles or herpes zoster infection. But Gabapentin GR, given in a 1800-mg dose once or twice a day over a 10-week period, didn't show statistically significant efficacy compared to the placebo.

"The phase III results we received today were very surprising and disappointing to us in light of the encouraging safety and efficacy data that we observed in our phase II clinical trial, in which we achieved statistically significant results in a four-week period as compared to placebo," said DepoMed CEO John Fara.

DepoMed said statistical significance relative to placebo was achieved in each of the first six weeks for the once-daily treatment arm of the study and in each of the first five weeks for the twice-daily treatment arm, but that pain scores in the placebo group continued to improve in the last four weeks of the study.

"We saw clinically meaningful and statistically significant reductions in pain scores from baseline to the 10-week endpoint in both active treatment arms," Fara said. "However, the unexpected improvements in the pain scores of the placebo group during the last four weeks of the study prevented the achievement of statistical significance in the primary endpoint that is required by the FDA."

DepoMed said that it will evaluate the results further to decide how to proceed. Its stock was recently sinking $2.87, or 58%, to $2.06.