First, the good news: In a phase 2b trial, Zalicus' (Nasdaq: ZLCS) Synavive passed its primary endpoint, improving patients' rheumatoid arthritis symptoms compared with placebo.

Despite the seemingly good news, Zalicus has decided to stop development of the drug.

For indications with high unmet need, beating placebo is usually good enough. But for diseases such as rheumatoid arthritis, being better than placebo just doesn't cut it. There are too many other options for patients.

In addition to being compared to placebo, Synavive was compared to its individual components -- prednisolone and dipyridamole -- as well as prednisolone, another drug commonly prescribed for rheumatoid arthritis. Unfortunately, the combination product didn't perform any better than prednisolone alone.

The company didn't release any information about whether Synavive beat the other active comparators, but it really doesn't matter. Even if the Food and Drug Administration would approve Synavive with just placebo data, no doctor would prescribe it if it isn't any better than prednisolone, which is available as a generic. Shelving the drug is really Zalicus' best move.

This bad news could be good for Pfizer (NYSE: PFE), Incyte (Nasdaq: INCY), and Rigel, which are all developing oral rheumatoid arthritis drugs that might have competed with Synavive. Pfizer is waiting to hear from the FDA on or before Nov. 21 about its drug tofacitinib. Incyte, with partner Eli Lilly (NYSE: LLY), and Rigel (partnered with AstraZeneca (NYSE: AZN)) aren't much further behind.

Losing its lead pipeline drug is a big hit for Zalicus; shares are down about 40% on the news. The company will need to hunker down and focus of its other pain medications: Z160, which just entered a phase 2 trial, and Z944 that's a little further behind. Without any major catalysts for about a year, investors buying the drop today have to be willing to hold for awhile.

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