Incyte Corp said on Wednesday that it would stop a mid-stage study on its combination treatment after it failed to prove to be sufficiently effective to treat metastatic colorectal cancer.
The results cast a shadow on the prospects of the drug, Jakafi, which is also being studied in a late-stage trial to treat advanced pancreatic cancer.
Incyte's shares fell nearly 12 percent to $65.50 in extended trading.
Piper Jaffray analysts said while it would be premature to write off the pancreatic cancer studies, the risk of success of Jakafi, or Ruxolitinib, had gone up.
"Jakafi for solid tumors is one of the key pillars to support Incyte's valuation and potential upside, so we are not surprised to see the after-market weakness," the analysts wrote in a note to clients.
Jakafi is an FDA-approved drug to treat people with bone marrow disorders such as polycythemia vera and blood disorders including myelofibrosis.
Incyte was testing Jakafi in combination with Bayer AG's Regorafenib to treat metastatic colorectal cancer, in which diseased cells break away from the colon or rectum and spread to form tumors on other organs.
"The last thing any company needs in the midst of the current biotech meltdown is a clinical trial setback," Piper Jaffray said.
(Reporting by Rosmi Shaji and Shailesh Kuber in Bengaluru; Editing by Savio D'Souza)