Alkermes Plc has been told to conduct more clinical trials of its experimental depression treatment after the U.S. Food and Drug Administration rejected its initial application for approval, citing a lack of evidence of its effectiveness.

The FDA’s decision knocked nearly $2 billion off the company’s value and spells extra cost for the Dublin-based drugmaker, which has two major drugs already in the market but for whom the ALKS 5461 depression treatment was seen as a driver of future revenue.

“To say we were surprised would be an understatement,” Alkermes’ Chief Executive Officer Richard Pops said on a conference call with analysts on Monday.

The drugmaker is working to develop several treatments for other disorders of the central nervous system, but will have to resubmit its marketing application before any future launch of the depression drug after the FDA’s “Refusal to File” letter.

Two of the three late stage trials conducted on the drug two years ago failed to meet efficacy goals before a third study in October 2016 showed significantly reduced symptoms of depression compared to a placebo.

The company initiated another late-stage trial of the drug in June. Pops said it was not clear if this study could be adapted to meet the FDA’s request for data.

“We don’t believe any additional clinical trials are necessary,” he said.

Alkermes said it will request a meeting with the regulator to hash out the next steps in its efforts to bring the drug to market.

ALKS 5461, a once-daily pill combining samidorphan and buprenorphine, is designed to rebalance brain function that becomes dysregulated in the state of depression, and was developed to treat major depressive disorder in patients with an inadequate response to standard antidepressant therapies.

The FDA asked for additional well-controlled clinical trials as well as a bioavailability study to show bridging data between the drug and the reference drug, buprenorphine, which is usually prescribed to depression patients.

An estimated 16.2 million people in the United States suffered from major depressive disorder in 2016, according to the company, and a majority of the patients do not adequately respond to initial anti-depressant therapy.

The company’s other two drugs in the market treat schizophrenia and alcohol dependence. Its development pipeline includes drugs for treatment of multiple sclerosis and schizophrenia.

(Source: https://www.reuters.com/article/us-alkermes-fda/fda-refuses-to-review-alkermes-depression-treatment-seeks-more-trials-idUSKCN1H90W5)