Amarin Corp Plc's shares slumped as much as 64 percent on Thursday, a day after an advisory committee to the U.S. Food and Drug Administration voted against allowing the company's triglyceride-lowering drug for use in a broader patient population.
The advisory committee recommended that the drug's approval be kept pending until the results of an 8,000-patient trial indicate whether the drug, Vascepa, actually does reduce cardiovascular risk. Results of the trial are not expected until 2016.
Amarin was seeking approval for Vascepa in reducing heart risk in patients with blood fat abnormalities, who also take cholesterol-lowering statins such as Pfizer Inc's Lipitor.
"Given the negative panel vote, we do not expect an approval on the December 20 (review) date and see this outcome as a significant setback for Vascepa's commercial outlook," J.P. Morgan Securities analyst Chris Schott wrote in a note.
Schott, who downgraded the stock to "neutral" from "overweight", noted that the expanded indication targeted a market that was ten times larger than its current label.
Vascepa is already approved to lower triglyceride, or blood fat levels, in patients who are not also taking statins.
Jefferies & Co analysts slashed their price target on Amarin shares to $4 from $20, saying the stock was worth only $1 without the expanded indication.
"The delay in approval enhances the risk and impact of generic Lovaza in the first quarter of 2015 on both Vascepa share and price," the analysts said in a research note.
Lovaza is an existing treatment for lowering triglyceride levels, marketed by GlaxoSmithKline.
Amarin shares were down 62 percent at $1.97 in early-afternoon trading on the Nasdaq. They touched a three-year low of $1.85.
(Reporting by Natalie Grover in Bangalore; Editing by Maju Samuel)