Bristol-Myers Squib (NYSE:BMY) shed almost a fifth of its value as one of its key immunotherapy drugs failed a phase III trial as a treatment for lung cancer.
Opdivo is already approved in a number areas but did not meet its primary endpoint as a treatment for non-small cell lung cancer.
The news immediately boosted shares in Merck (NYSE:MRK), which has a rival immunotherapy treatment, Keytruda.
Bristol Myers said newly diagnosed lung cancer patients taking Opdivo showed no progression-free survival.
Giovanni Caforio, the company’s chief executive, said: “While we are disappointed CheckMate -026 didn't meet its primary endpoint in this broad patient population, we remain committed to improving patient outcomes through our comprehensive development program,”
Immunotherapy is a huge growth sector within the pharmaceutical industry and sales of checkpoint inhibitor Opdivo in other applications saored to US$840mln in the last quarter.
Lung cancer is among the deadliest forms of the disease, however, and if successful, Opdivo may have been looking at revenues of more than US$12bn at their peak.
The trial’s failure wiped US$24bn off its market cap at one point, while boosting Merck’s value by almost 8% to US$172bn.
Opdivo was the first PD-1 immune checkpoint inhibitor to receive regulatory approval anywhere in the world and currently has regulatory approval in 54 countries including the United States and Japan.
Immune checkpoint inhibitors enable the body to recognise cancerous cells and stop them going undetected by the body's natural defences.
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Bristol-Myers shares closed down 16% at $63.28, after hitting an intraday low of $61.56, on Friday.