Well, that's one less potential competitor for Alpharma (NYSE: ALO) and Endo Pharmaceuticals (Nasdaq: ENDP) to worry about. On Wednesday, tiny NeurogesX (Nasdaq: NGSX) announced that its pain patch had failed in a phase 3 clinical trial.

NeurogesX has been trying to get NGSX-4010 approved as a treatment for a variety of nerve pain-related disorders like post-herpetic neuralgia (shingles-related pain), an area where Endo's Lidoderm patch and Pfizer's (NYSE: PFE) Lyrica dominate. The failed phase 3 study announced this week was testing NGSX-4010 as a treatment for HIV-related nerve pain.

Running clinical trials for pain drugs can be a daunting task because of the huge placebo effect that can sometimes occur. The control group thinks that the sugar pill is working and reports feeling less pain, which raises the pain-relief bar for the drug. This is what NeurogesX claims happened in this latest study.

The results NeurogesX announced yesterday do contrast with its previous phase 3 study in HIV-related nerve pain, in which NGSX-4010 was successful. The drug has also shown promise as a treatment for the aforementioned shingles-related pain. Even with the failed trial this week, NeurogesX is continuing with its plan to file a marketing application for NGSX-4010 in the U.S. later this year, as well as continuing with its already filed European Union marketing application.

Yesterday, NeurogesX's shares sank about 30% on the news of the failed trial. After a $25 million private placement last month, NeurogesX is trading at a price roughly around its cash levels when accounting for the $39 million in cash it last reported at the end of the third quarter.

NGSX-4010 is NeurogesX's only interesting compound, and at this reduced cash level, it's making for a cheap acquisition target, like other drugmakers that had a potentially valuable asset but have fallen on hard times. This doesn't mean that NeurogesX will command a premium price for itself, but a drug developer like Cephalon (Nasdaq: CEPH) that may be on the hunt for a pain patch to round out its pain franchise would probably have no qualms about biting at NeurogesX for $100 million to $150 million or so if it had the chance. It's never a smart idea to buy a drugmaker on the possibility of a buyout, but this is what NeurogesX's future may be portending.