An experimental drug to combat amyotrophic lateral sclerosis, commonly called Lou Gehrig's disease in the United States, failed to work in an important trial and Biogen Idec said it would stop development of the treatment.
The drug, dexpramipexole, had shown promise and seemed to work against ALS in a mid-stage clinical trial in 2011.
Biogen shares fell 6 percent in premarket trading on Thursday.
ALS is a disease of nerve cells in the brain and spinal cord that affects about 30,000 Americans, according to the ALS Association. About 5,600 Americans are diagnosed with the disease each year. American baseball player Henry Louis "Lou" Gehrig died of the disease in 1941.
There is currently only one drug that is used to help people with ALS - Rilutek, or riluzole, made by Sanofi. It has been shown to prolong the life of people with ALS, who have a life expectancy of two to five years after diagnosis.
The news was an uncommon blow for a company that has excelled in recent years and could push shares down about 10 percent, Mark Schoenebaum, a biotech analyst at ISI Group, said in an early research note.
He said analysts had estimated sales for the drug in 2016 of about $350 million - or about 4 percent of Biogen revenue.
The late-stage dexpramipexole trial, which was called Empower and enrolled 943 people with ALS at 81 sites in 11 countries, did not show that the drug increased the ability of people with the disease to function or improved their survival rates.
"We share the disappointment of members of the ALS community, who had hoped that dexpramipexole would offer a meaningful new treatment option," Biogen Executive Vice President of Research and Development Douglas Williams said in a statement.
The company said it would continue to work on potential treatments for the disease.
(Reporting by Caroline Humer in New York and Esha Dey in Bangalore; Editing by Roshni Menon, Nick Zieminski and John Wallace)