By Varsha Tickoo

BANGALORE (Reuters) - Epix Pharmaceuticals Inc (EPIX.O: Quote, Profile, Research) said it will stop further development of its depression drug that failed to show sufficient effectiveness in a recent trial, and its shares were hammered to an all-time low with almost half the market value sliced off.

While the drug, PRX-00023, showed a good safety and tolerability profile, the overall results of the mid-stage trial were disappointing, CEO Michael Kauffman said in a statement.

The drug, which was the most advanced in Epix's pipeline, had already failed to prove effective for general anxiety disorder in 2006, following which the company investigated it as a treatment for major depressive disorder (MDD).

"We believe there were some expectations for success in the Phase II MDD study priced into Epix shares, given that in a previously completed Phase III trial of PRX-00023 in anxiety, (the drug) demonstrated a statistically significant effect," Cowen & Co analyst Ian Sanderson said in a note.

EPIX'S PLATFORM SUSPECT

Epix has other compounds in its pipeline being explored as treatments for Alzheimer's disease, pulmonary blood pressure and cognitive impairment. These are also based on the same drug discovery platform as PRX-00023.

Analyst Sanderson expressed a lack of conviction in the company's platform, and maintained a "neutral" rating on the stock.

However, Needham & Co analyst Alan Carr disagreed with this view, and was hopeful about the three remaining programs.