Amicus Therapeutics Inc (FOLD.O) lost nearly half of its market value after the company said its experimental drug to treat a rare, inherited disorder failed to meet the main goal of a late-stage study.
The company's shares were down 43 percent at $3.28 in early trading on Thursday on the Nasdaq. The stock had gained about 85 percent up to the close on Wednesday this year.
Amicus said on Wednesday that six-month data from the study showed that the drug, Amigal, did not significantly cut down the amount of a kind of fat in kidney blood vessels in Fabry disease patients, compared to a placebo.
Fabry disease is caused by the body's inability to produce the enzyme that helps breaks down fat.
Amigal, being developed in partnership with British drugmaker GlaxoSmithKline Plc (GSK.L), is Amicus's most advanced pipeline product.
The news prompted at least three analysts to cut their price targets on the stock, and cast doubts on chances of the drug proving strong enough to be approved as a stand-alone therapy.
Capstone Investments analyst Mayank Gandhi said Amigal data may not be sufficient to convince clinicians to use it as a stand-alone therapy, compared to the strong efficacy proven by Fabrazyme, the only enzyme replacement therapy for the disease from Sanofi SA's (SASY.PA) unit Genzyme.
Canaccord Genuity analyst Ritu Baral cut her price target on the stock to $6 from $11.
Leerink Swann analyst Joseph Schwartz said probability of success for Amigal as a stand-alone therapy was 25 percent now from 75 percent earlier.
Amicus also said the U.S. Food and Drug Administration indicated that it will consider the 12-month efficacy and safety data from the study.
"Should we see extremely strong evidence of stabilization of functional renal endpoints at 12 months, as well as supportive GL-3 data, there may be a chance Amicus will file for and receive approval," Canaccord Genuity's Baral said.
The companies expect 12-month data from the study in the first half of 2013.
(Reporting by Vidya P L Nathan; Editing by Sriraj Kalluvila)