Earlier in the week, small development stage drugmaker NeurogesX (NASDAQ:NGSX) sent its shares soaring more than 13% when it announced clinical trial results for its lead drug.

NeurogesX's lead drug is a pain patch named NGX-4010, which is designed to treat shingles-related nerve pain also known as post-herpetic neuralgia. The positive study results that were announced on Tuesday were from a 416-person phase 3 clinical trial testing the compound against a control group of a lower dose of the drug. In the study, NGX-4010 was successful on its primary endpoint of pain reduction and also on its secondary efficacy endpoints.

What gets investors so hot and bothered when they hear post-herpetic neuralgia and pain patch in the same sentence is that Endo Pharmaceuticals (NYSE:ENDP) has turned its lidocaine-based pain patch (Lidoderm) into a $570 million a year compound. A good portion of these sales has been from off-label prescriptions for other pain-related indications, which presumably would occur with NGX-4010 as well if it can gain regulatory approval.

This is the second successful phase 3 study for NGX-4010 in post-herpetic neuralgia. NeurogesX plans to file for marketing approval of it as a treatment for this indication in the European Union this year and in the U.S. in the second half of 2008. If approved, it would compete against the aforementioned Lidoderm as well as oral drugs for post-herpetic neuralgia like Pfizer's (NYSE:PFE) Lyrica.

NeurogesX is one of the youngest publicly traded drug developers on the market, having IPOed four month ago. It's trading at a low $110 million market capitalization and under its $11 a share IPO price. If NGX-4010 is able to become even a tenth the success that Lidoderm is, then shares of NeurogesX won't be trading at this level for long.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. Pfizer was recommended by the Inside Value team. The Fool has a pain-free disclosure policy.