NEW YORK (CNNMoney.com) -- Vasogen Inc. said Monday that its experimental heart drug failed to reduce the risk of dying from heart failure - news that sent its stock plunging.

The Canadian biotechnology company said that clinical trials for its drug, Celacade, missed its main goal of sharply cutting the risk of death and hospital treatment related to chronic heart failure.

"It's disappointing, but I do believe that we showed that Celacade had biological activity in patients," Vasogen CEO David Elsley said in a telephone interview. "Obviously, in the total population, that benefit was not shown in the trial."

The company's "Acclaim" study of the drug included about 2,400 patients.

Vasogen (down $1.35 to $0.50, Charts) shares tumbled, losing nearly three-quarters of their value in heavy afternoon trading on Nasdaq. About 33 million shares traded, about 53 times the stock's average daily volume.

Toronto-based Vasogen said the drug did achieve its goal in a smaller "subgroup" of nearly 700 patients, by reducing their risk of death by 39 percent.

The subgroup included patients with so-called class 2 heart failure, a less advanced stage of heart disease than the class 3 patients who made up the bulk of the study.

"Hindsight is a beautiful tool," said Elsley, who added that he would have focused the study on class 2 patients if he had known what he knows now: That the heart tissue in class 3 patients is "too damaged to reverse that process," while Celacade has "very high impact" on patients with class 2.

The company said it would present complete results of the study at the World Congress of Cardiology in September in Barcelona.

This is the not the first time the biotech has run into trouble with Celacade.

Back in August, the stock sank from about $6 to $2 a share after the company shut down a separate Celacade study, called Simpadico. That study was closed early because the drug's effectiveness in treating peripheral arterial disease was weak.

Going forward, Elsley said executives had yet to decide whether a third Celacade study would be conducted on patients with class 2 heart failure.

In the meantime, Vasogen has completed early-stage studies of an experimental treatment for dementia, Alzheimer's disease and diabetic retinopathy, and plans to conduct more advanced studies this year.

But pulling out of a stock price plunge that follows two failed late-stage studies isn't going to be easy, said Joseph Pantginis, analyst for Canaccord Adams, who cut his rating on Vasogen to a "hold" from a "buy."

"Investor confidence has been dealt a serious blow and will take much time to rebuild itself going forward, if that's even possible," said Pantginis.

Pantginis does not own shares of Vasogen stock, though the biotech is an investment client of Canaccord.

Related: Once-feared Thalomid gets another thumbs up