Eli shares tumbled 5.3% to $81.33 while its partner for the once-a-day drug baricitinib, Incyte Corp. (NYSE: INCY) fell even more - over 11% to $125.21 ahead of the bell.
Reportedly, Wall Street analysts had believed the treatment, if approved, would have generated more than $1bn in sales by 2020.
Rheumatoid arthritis is a well-known condition, which affects the joints. It affects more than 23mln worldwide, with around three times as many women as men having it.
A letter from the FDA indicated that additional data was needed to determine the most appropriate doses for the drug along with more information in regard to it safety
The companies disagree with the agency’s conclusions, said Eli.
Christi Shaw, president of Lilly Bio-Medicines, said: "We are disappointed with this action. We remain confident in the benefit/risk of baricitinib as a new treatment option for adults with moderate-to-severe RA.
“We will continue to work with the FDA to determine a path forward and ultimately bring baricitinib to patients in the U.S."
In 2009, Lilly and Incyte announced an exclusive worldwide license and collaboration agreement for the development and commercialization of baricitinib and certain follow-on compounds for patients with inflammatory and autoimmune diseases.
Lilly and Incyte submitted the NDA (new drug application) for baricitinib to the FDA in January last year, and in January this announced the FDA’s three-month extension to allow time for review of additional data.
Lilly repeated today its financial guidance for this year, and Incyte said it was evaluating the news' impact and would provide any update on its first-quarter earnings call.