Horizon Pharma Plc's shares tumbled 18 percent after the company ended a late-stage trial that was testing its drug, Actimmune, as a treatment for a rare neuromuscular disorder that has no approved medicines.
Actimmune failed to demonstrate a statistically significant benefit over a placebo in patients with Friedreich's ataxia (FA) on a scale used to measure progression of the disease, the company said.
The drug is already approved by the U.S. Food and Drug Administration for use in two rare, genetic conditions - chronic granulomatous disease and severe, malignant osteopetrosis.
Actimmune, which is also being evaluated for use in cancer, also fell short on secondary goals in the FA trial.
Horizon has been focusing on treatments for rare diseases and expects such drugs to account for about 60 percent of its net sales by 2020.
The pharmaceutical industry is vested in so-called orphan drugs because their strong patent protection helps ensure reliable pricing power for drugmakers, at a time when drug pricing strategies are being heavily scrutinized.
Friedreich's ataxia is named after Nicholaus Friedreich, a German doctor who first described the condition in the 1860s.
The inherited incurable disorder typically emerges in childhood causing nervous system damage and problems with motor function, and afflicts between 4,000 and 6,000 Americans.
The announcement does not impact Horizon's full-year 2016 adjusted net sales, the Dublin, Ireland-based company said.
In the first nine months of 2016, Actimmune accounted for about 12 percent, or $80.5 million, of Horizon's net sales.
Mizuho Securities' Irina Koffler said she had been relatively negative on this trial all along, assigning only a 30 percent probability of success, in a note on Thursday.
The trial failure does not change Horizon's M&A appetite, Chief Executive Timothy Walbert said on a conference call with analysts, adding that recent acquisitions would more than offset the growth the company would have seen by selling Actimmune to FA patients.
The company, which also sells treatments for rheumatology and pain relief, has orchestrated a string of acquisitions in the past year. It acquired Crealta Holdings for $510 million for its gout treatment in January.
In September, Horizon agreed to pay nearly $800 million for Raptor Pharmaceutical to access its rare metabolic disorder drug Procysbi and cystic fibrosis treatment Quinsair.
(Reporting by Natalie Grover in Bengaluru; Editing by Saumyadeb Chakrabarty)