Biohaven (BHVN.US) depression drug mid-term trial failed, dropping 16% after hours.

Biohaven (BHVN.US) company said on Wednesday that its experimental depression drug did not meet its main goal in a mid-stage trial. This is the latest in a series of trial and regulatory setbacks the company has faced this year. The company's stock fell 16% in after-hours trading, with a cumulative decline of over 70% so far this year. Previously, the company faced a clinical trial failure in March, and its drug troriluzole, used to treat a rare neurodegenerative disease (spinocerebellar ataxia), was also rejected by the U.S. health regulatory agency. In a six-week trial for patients with severe depression, Biohaven's drug BHV-7000 did not show a significant difference in reducing depressive symptoms compared to a placebo based on changes in the Montgomery Depression Rating Scale. The company considers the depression subgroup analysis as a "hypothetical exploration," but plans to focus resources on key priority areas such as immunology, obesity, and epilepsy by 2026, without conducting additional psychiatric clinical trials. Royal Bank of Canada Capital Markets analyst Leonid Shumachev said that given the limited clinical efficacy data so far and the challenging nature of severe depression itself as an indication with significant variability and placebo effects, the trial failure "is not surprising." The company is also testing BHV-7000 for epilepsy and had previously evaluated it for treating bipolar disorder, but declared failure earlier this year in a mid-to-late-stage trial. Shumachev said, "With the highest risk event now behind us, we believe the company's strategic focus is back on recent updates in higher investor interest, higher probability of success projects (such as epilepsy), which may to some extent limit the downside potential of the stock." Last month, Biohaven announced plans to reduce annual direct research and development expenditures by about 60% after the FDA rejected its drug troriluzole for treating spinocerebellar ataxia, which affects movement and balance.