* Says drug did not meet main goal
* Leerink Swann, Wedbush Morgan maintain ratings on stock
* Inspire shares fall as much as 20 pct (Adds analyst comment, updates stock movement)
By Krishnakali Sengupta
BANGALORE, Jan 21 (Reuters) - Inspire Pharmaceuticals Inc ISPH.O said its experimental drug, Prolacria, for the treatment of dry eye disease failed to meet the main goal in a late-stage trial, sending the company's shares down as much as 20 percent.
Wedbush Morgan Securities analyst Liana Moussatos, who was expecting the drug to fail in the late-stage trial based on mixed clinical data in the past, thinks the Prolacria program is "dead".
The drug, which has already gone through four previous late-stage trials, was being studied in the latest trial under a special protocol assessment agreement with the U.S. Food and Drug Administration.
The next catalyst for the stock will be the mid-stage trial results of Inspire's drug AzaSite to treat blepharitis, or inflammation of the eyelid margin, in the second quarter, Moussatos said.
With the Prolacria data out of the way, Leerink Swann analyst Joseph Schwartz sees a number catalysts that could drive the stock higher later in the year, including a possible European partnership for the company's experimental late-stage cystic fibrosis drug, denufosol.
Prolacria could get approved in Japan towards the later part of the year, he said, maintaining his "outperform" rating on the stock.
Analyst Moussatos, who has a "neutral" rating on the stock, expects Inspire to come out with denufosol data in the first quarter of 2011.
"With failed Prolacria phase 3 results announced and AzaSite phase 2 results likely in Q2, we believe ISPH could be an interesting trading opportunity," Moussatos added.
"Due to positive anecdotal comments from physicians about treating blepharitis patients with AzaSite, we believe the mid-stage trial has a higher likelihood of success," she said.
The main goal of the late-stage Prolacria study was to achieve zero-staining in a test that is used to detect the presence of foreign bodies in the eye and damage to cornea.
The trial, which had 490 patients, also failed to meet the secondary goal of showing significant improvement in the proportion of patients who achieved greater than or equal to a two-unit reduction in staining scores, compared to those on a dummy drug.
The test that was used to measure the goals of the study, called fluorescein staining test, uses an orange dye (fluorescein) and a blue light to detect foreign bodies.
"We have provided the top-line results from this trial to our partner Allergan Inc (AGN.N) and we will be conducting a thorough review of the program before determining next steps, if any," Chief Executive Christy Shaffer said in a statement.
Shares of the company were down 12 percent at $5.81 on Nasdaq. They had fallen more than 20 percent to $5.25 earlier in the session. (Reporting by Krishnakali Sengupta in Bangalore; Editing by Ratul Ray Chaudhuri and Aradhana Aravindan)