Depomed Inc. (NASDAQ: DEPO) opened Monday on a loss of nearly 50%, as traders panned the company's clinical trial results for Serada. The drug, which is intended to treat hot flashes related to menopause, met only one one of four co-primary goals in late-stage trials after 12 weeks.
Depomed was hoping to prove that Serada could help patients achieve a "statistically significant reduction in the frequency and severity of menopausal hot flashes." However, the company confessed that the placebo effect was unexpectedly high in clinical studies.
As a silver lining, higher doses of the drug resulted in better clinical trial outcomes. An 1,800 milligram dose achieved all four co-primary endpoints, while a middling dose of 1,200 mg met three of the four co-primary goals.
"We look forward to meeting with the FDA later this quarter to discuss these results, the path to approval and any additional clinical work that may be required," reported Depomed's chief executive, Carl Pelzel.
Monday's drastic drop pushed DEPO back to support at its rising 50-day moving average, which has collaborated with its 80-day counterpart to keep the shares afloat since early June. Prior to this plunge, the security had racked up a stellar year-to-date gain of nearly 286%.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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