Inspire Pharmaceuticals (Nasdaq: ISPH) was downgraded to “Market Perform” on Monday after the company announced a failed clinical trial of a key potential drug.

The announcement triggered a massive selloff of Inspire shares, which plummeted 59 percent in value.

Leerink Swann Research’s Joseph Schwartz issued the downgrade.

“This disappointment for denufosol is highly unexpected based on physician feedback,” he said in a note to investors as reported by the Associated Press.

Schwartz noted that Inspire’s eye treatment products have “significant market potential.” Inspire said in a statement Monday that the company would focus on that product line.

However, Schwartz pointed out that most investors held Inspire stock due to the potential of the cystic fibrosis product.

Inspire, which completed a move to new headquarters in Raleigh from Durham on Monday, announced the failure before the markets opened Monday.

The news sent Inspire down immediately more than $4.70 from Friday’s close of $8.40.

Shares hit a low of $3.45 in extremely heavy trading. More than 13 million shares were traded by 11 a.m. Typical trading is just over 500,000 shares.

Inspire ended the day at $3.47, down $4.93‎ or 58.7 percent.

By the close, more than 20 million shares were traded

By trading at under $3.60, Inspire shares hit a new 52-week low in heavy trading. Over the past year, Inspire traded between $4.42 and $8.74.

“These TIGER-2 results were disappointing and unexpected given the treatment effect observed in the TIGER-1 trial,” said Inspire Chief Executive Officer Adrian Adams, referring to the names for the Phase III and Phase II trials. “We will conduct a thorough analysis of the data to fully understand the results from this trial and the impact on any future development of denufosol and on the Company going forward. We expect to provide a detailed corporate update by mid-February. Meanwhile, we will continue to focus on our ophthalmology business.”

Wedbush Securities analyst Liana Moussatos said the trial results were unexpected, according to Reuters.

Reuters added that company executives will announce a new strategy in February that could include “possible strategic directional changes.”

Read the full report here.

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