Zalicus Inc said it would stop developing its most advanced product, an experimental pain drug, after it failed to show a benefit over a placebo in two mid-stage trials.
Zalicus' shares plunged 72 percent to $1.25 in early trading on Monday.
The drug, called Z160, is a non-opioid painkiller. It was being developed for treating chronic pain associated with shingles and a neurologic condition that leads to back pain.
Zalicus had focused its attention on Z160 after it pulled the plug on its experimental rheumatoid arthritis drug Synavive last year due to disappointing trial results.
"Despite its promising preclinical profile, Z160 was unable to translate those results into clinical efficacy," Chief Executive Mark Corrigan said in a statement.
Non-opioid painkillers have assumed greater importance given the widespread abuse of opioid-based pain drugs.
Zalicus said it now planned to focus on another non-opioid pain drug, Z944, which is in early-stage development.
The company also has one opioid painkiller, Exalgo, that is already approved in the United States and marketed by its partner Mallinckrodt Plc. Zalicus earns royalties on the sales of the drug.
(Reporting by Esha Dey in Bangalore; Editing by Saumyadeb Chakrabarty)