Forest Laboratories reported that its new drug for neuropathic pain, radiprodil, had failed to achieve its objectives in stage 2 clinical trials. The medicine was developed in partnership with Hungarian drug maker Gedeon Richter, Ltd. It had been hoped that it would be useful for patients with peripheral neuropathy resulting from diabetes.

Needham & Co. pharmaceuticals analyst Elliott Wilbur called the disappointing results a “minor setback.” He gave Forest a “Hold” rating. Wilbur’s research report on Forest and radiprodil had the headline “Another Shot on Goal Goes Wide.”

The drug did not produce significant reductions in patient-reported pain scores for all the dosages tested. Forest says that it and Gedeon Richter will review the findings before making a decision about the further development of radiprodil.

This is a minor setback, the Needham analyst says, because Forest got some useful reality testing at an early—and less expensive—stage of clinical trials.

But Forest was counting on radiprodil because some of the company’s key drugs are coming off patent in the foreseeable future. Lexapro and Namenda will come off patent in 2012 and 2015 respectively. Forest had been hoping that the drugs in its pipeline would help it to recoup around an estimated $3 billion reduction in revenues when Lexapro and Namenda come off patent.

The disappointment is more acute also because it is the third straight drug under development by Forest to fail in clinical trials. The previous flops were called daxas and dutogliptin.

Forest has other drugs in development in addition to radiprodil. The company is hoping for the FDA go-ahead for linaclotide and aclinidium, which are in stage 3 trials. The company also expects to hear from the agency by October in the case of ceftaroline.

“This pipeline setback highlights the inherent difficulty and risks in [Forest’s] strategy to replace . . . [expected revenue reductions from Lexapro and Namenda] through pipeline developments,” wrote Wilbur.

Forest’s shares (NYSE:FRX) were trading down slightly -0.11 percent (- $0.04) at $27.94 at 11:40 AM EDT today.

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