Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Analyze any failure long enough and you might find a success. 

Allergan PLC Wednesday night reported data from a mid-stage trial of Botox in treating major depressive disorder and announced it planned to run a bigger trial for the drug. The rather significant wrinkle is that the drug didn't clearly succeed in the smaller trial. 

Allergan is trying to transform itself into a more-conventional drugmaker after an M&A-driven history. But the industry's too-common tendency to push iffy Phase 2 trials into Phase 3 isn't something the company should emulate. 

Sticking Point
Allergan shares have jumped around a lot but cost about the same as they did a year ago
Source: Bloomberg

Continuing to expand or shore up Botox sales is key for Allergan. The wrinkle- and migraine-reducing injection accounted for nearly a fifth of the company's revenue in 2016. Analysts expect Botox to still be Allergan's largest drug in 2022, and to be its fastest-growing drug between now and then. Failure to meet such expectations would leave Allergan over-reliant on newer drugs and some risky bets in its pipeline.

Wall Street analysts expect Botox to remain Allergan's biggest seller five years from now, and to grow sales more than any of its other medicines
Source: Bloomberg

In the Phase 2 trial, Botox failed to prove statistical superiority to a placebo in women with major depressive disorder in two different doses. The smaller dose showed some benefit, the bigger one showed none at all, which adds further confusion. 

Allergan suggests a bigger and more tightly run trial will give the drug a better chance of success. But such reasoning has been used to justify many Phase 3 trials that have gone on to fail. The best justification for starting a Phase 3 trial will always be a slam-dunk Phase 2. Anything else likely involves some element of cherry-picking data to support a pre-selected conclusion.

Getting FDA approval for Botox to treat depression could add untold billions to its sales, which helps explain the urge to look at trial data through rose-tinted glasses. And it is possible the bigger trial could surprise to the upside. Drugs do sometimes succeed after failing earlier trials, and depression studies are particularly tricky. 

But in a world where even stellar Phase 2 trials lead to failed Phase 3s, Allergan seems to be throwing good money after bad.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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