Ariad Pharmaceuticals Inc said the U.S. Food and Drug Administration had placed a partial hold on patient enrollment for trials of its cancer drug Iclusig after a number of patients taking the drug experienced blood clots and heart damage.
Ariad shares plunged as much as 77 percent to $4.00 in heavy trading -- their lowest in three years.
The company said it paused enrollment in the trials after it reviewed new data from a pivotal mid-stage trial testing the drug to treat two forms of blood cancer.
"Timelines are now likely to all be pushed out which further makes it unlikely the stock will meaningfully recover anytime soon since this is the biggest catalyst for the stock," RBC Capital Markets analyst Michael Yee wrote in a note.
He said data from a late-stage trial of the drug in newly diagnosed chronic myeloid leukemia would probably be delayed to the end of 2014 from the third quarter of 2014.
Iclusig was approved in December to treat two rare types of blood cancer, but the label warned of the potential for blood clots and liver toxicity.
The drug is also being tested in seven mid-stage studies for lung cancer, thyroid cancer and another form of blood cancer.
About 12 percent of patients treated with the drug developed blood clots in arteries after 24 months, while 6.2 percent experienced events that could lead to heart damage, Ariad said.
The company said it would reduce the dose to 30 mg from 45 mg in the late-stage study.
The drug will continue to be available at its approved dose of 45 mg to patients with resistant or intolerant chronic myeloid leukemia and Philadelphia-chromosome positive acute lymphoblastic leukemia.
Ariad said it was in talks with the FDA and other health regulators to make changes to the drug's label.
Citi analysts said the boxed warning on the drug could be updated to include the risks of blood clots and this would reduce the probability that it would take significant market share from competing drugs made by Novartis AG.
The company said it would modify the eligibility criteria for Iclusig studies to exclude patients who had a heart attack or stroke.
"We do think that the modifications we're making in conjunction with the FDA will allow us to ameliorate the toxicity we are seeing and still retain the efficacy," company executives said on a conference call with analysts.
Ariad's shares were trading down at $4.92, down 71 percent in morning trade on the Nasdaq. Over 60 million shares had changed hands by 10:50 am ET, more than 15 times their 10-day average.
(Reporting By Vrinda Manocha in Bangalore; Editing by Ted Kerr and Saumyadeb Chakrabarty)