Alkermes Plc (NASDAQ:ALKS) just demonstrated why it’s so important to monitor through to completion in the biotech space. The company reported the failure of two phase III trials in its lead depression asset in February this year, and basically collapsed overnight. There was a hint of efficacy however, in the second of the two trials, albeit not enough to register as statistically significant, and Alkermes took pounced on this hint and expanded into a third pivotal. This is something we’ve seen companies do time and time again, and it’s also something that many analysts would take a look at and denounce as an attempt to stem negative sentiment post data release.

Said analyst are now having to rethink their approach to this sort of situation, however, as Alkermes’ latest data highlights an efficacy endpoint hit, and a statistically significant one at that. Further, it paves the way for the approval of a candidate that, just six months ago, was to all intents and purposes completely discounted from Alkermes’ valuation.

Here’s what you need to know.

The drug is called ALKS 5461, and it’s targeting a severe from of depression called major depressive disorder (MDD). These are patients who have (generally) been on various other types of SOC depression medication for an extended period of time, and for which these various other types are no longer effective.

The drug is a combination of two compounds – buprenorhipne, a semisynthetic opioid commonly used in detox environments, and samidoprhan, another of Alkermes’ development candidates that is in development as a monotherapy, but is looking far more likely to hit markets as a combination as part of ALKS 5461.

So what happened in the previous trials?

Well, in the early phase studies, phase I and II, the drug performed exceptionally, demonstrated a high degree of efficacy at a very manageable dose, and a pretty clean safety profile. These exceptional results sent the drug into a couple of pivotals that the company and its shareholders expected it would pass with flying colors.

Unfortunately, neither did.

In the first of the two, a 2 mg dose of the drug demonstrated no treatment effect above and beyond to placebo. Alkermes said at the time that this was because of a better than expected response by the placebo group – something that, at the time, markets were skeptical to believe, but that now looks plausible.

In the second phase III, the drug did show some degree of improvement in response over placebo, but not enough to label it statistically significant and – in turn registered as a failure.

Fast forward to October, and the company puts out data from the trial that many just viewed as a hail Mary. This time, however, the drug hits. Against an industry standard measure, and when compared to placebo, ALKS 5461 demonstrated statistically significant superiority in improving depression in MDD patients from baseline over placebo, when administered as a tag on therapy. That is, when a patient takes Alkermes’ drug and their current SOC regimen, they seem to improve further and faster than when they just take their current regimen. Of course, many have essentially stopped responding to this SOC regimen, but that’s not really the point. The drug seems to work, and that’s why Alkermes is up to the degree it is at the end of this week.

So, what’s next?

Alkermes believes that the data it has on hand is more than enough to get its drug approved by the agency, so it’s in the process of putting together the application that will underpin its submission. There’s a small chance that the FDA will request a follow up study, based on the fact that the drug missed the endpoints in the initial iterations of the trial, but we think this is just as described – a small chance – and that the company will be able to ride through to an accepted application on the data in hand.

Once the agency accepts the submission, we’re then looking to PDUFA as the next important date to watch. We except a submission before the end of the year, an acceptance a couple of months later and a late 2017, early 2018 approval.