Pfizer stock skidded Monday after the Food and Drug Administration rejected its rare-disease drug — leading a smaller decline for similarly jilted Merck stock.
The companies received Complete Response Letters, meaning the FDA declined to approve their drugs. Pfizer and partner OPKO Health aimed to treat growth hormone deficiency in children. Merck asked for approval of a chronic cough treatment.
Both companies say they are in talks with the FDA to determine next steps. Pfizer didn't identify the reason for the regulatory shutout. Merck said the FDA's decision wasn't related to the safety of its drug.
On today's stock market, Pfizer stock skidded 2.4% to close at 51.54. Shares of OPKO Health toppled 23.8% to 3.23. Merck stock fell 1.4% to finish at 78.83. The action extended more broadly to pharmaceutical stocks which closed down a fraction after earlier diving as much 4.4%.
Pfizer Stock Downtrend Continues
The Pfizer-OPKO flop is a boon for Ascendis Pharma, which gained FDA approval for its weekly growth hormone injection last year. Ascendis stock popped 1.9% near 110.20 in early trading Monday.
Pfizer and OPKO forged their deal in 2014 for $295 million up front and up to $275 million in potential milestone payments. Regulators in Japan, Canada and Australia have approved the drug, known by the brand name Ngenla. It's also under consideration in Europe.
The news pushed Pfizer stock to continue a downtrend that began in late December.
Shares are trading below their 50-day moving average, according to MarketSmith.com. However, Pfizer stock still has a strong Relative Strength Rating of 97, which means it's in the top 3% of all stocks for 12-month performance, according to IBD Digital.
Merck stock has been under pressure in the latter half of this month. Shares collided with their 50-day line on Monday. The FDA rejected its chronic cough treatment, dubbed gefapixant. Last week, officials in Japan approved gefapixant. It sells there under the brand name Lyfnua.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
