Anacor Pharmaceutical Inc said the U.S. Food and Drug Administration approved its treatment for a fungal infection of the toenail.
The topical solution, Kerydin, is expected to be launched as early as the end of the quarter in the United States, the company said on Tuesday.
The approval comes a month after the regulator cleared a rival drug, Jublia, from the Canadian drugmaker Valeant Pharmaceuticals International Inc.
Anacor's shares fell nearly 11 percent in morning trade.
The company's stock crashed last year following efficacy data that showed Kerydin's degree of benefit was lower than that of Jublia. Both drugs had the same trial goal of "complete cure" — no trace of fungal infection and a clear nail. (reut.rs/1mbXp2f)
One of the most common nail infections with a high rate of recurrence, onychomycosis is largely under-treated.
Wedbush Securities analysts forecast U.S. sales of $16 million next year and peak sales of $347 million for the drug by 2021.
Onychomycosis, which causes nails to deform, discolor and also split from the nail bed, affects about 35 million people in the United States, Anacor said.
Palo Alto, California-based Anacor's stock recouped some of its losses and were down 7 percent at $15.59 in late morning trade.
(Reporting by Natalie Grover in Bangalore; Editing by Sriraj Kalluvila)