Pfizer stock plunges 15 percent
World's biggest drug company pulls experimental drug, stock plummets.
NEW YORK (CNNMoney.com) -- Pfizer stock tumbled Monday after the world's biggest drugmaker halted development of its most important experimental medicine.
Shares of Pfizer (Charts) sank as much as 20 percent in early trading as investors worried about what the New York-based company would do to replace the product, a heart drug called torcetrapib, in its pipeline.
Volume was heavy with more than 78 million shares traded in the first half hour.
On Saturday, Pfizer and the Food and Drug Administration announced that the drug company would cease its experiments with torcetrapib, because of an increased rate of death and heart problems in patients who took it.
The patients were taking torcetrapib to boost so-called "good" cholesterol, along with Pfizer's Lipitor, the world's top-selling drug, that lowers "bad" cholesterol. Lipitor alone was not associated with an increased rate of death in the clinical trial.
Industry analysts said the sudden end to the trial was a major setback for Pfizer, which is already cutting jobs as it seeks to lower costs and struggles with replacing a valuable stable of drugs that are going off patent in the next few years.
"Torcetrapib torpedoed," wrote Miller Tabak analyst Les Funtleyder in a note to clients. "Obvious question [is] what next? Our view is more cost-cutting and a few acquisitions on the horizon."
Analyst Barbara Ryan at Deutsche Bank North America cut her price target on the stock to $28 from $33 but kept a "buy" rating on the stock.
Pfizer said just last week that it would cut more than 2,000 sales reps from its 11,000-strong U.S. sales force. And at a conference for investors last week about the company's drug pipeline, executives including CEO Jeffrey Kindler were talking up the prospects of torcetrapib.
Lipitor, the world's top-selling drug with sales of $12.2 billion in 2005, will lose patent protection in 2011, opening up the drug to generic competition. Pfizer executives were hoping torcetrapib would help fill the hole left after Lipitor goes off patent.
They had created a patented Lipitor combo drug with torcetrapib. But now that late-stage tests have been stopped, Pfizer will have to rely on other potential drugs in its pipeline. This includes the HIV drug Maraviroc, which has been filed with the FDA, and late-stage experimental treatments for cancer and obesity.
Chris Schott, an analyst for Bank of America, wrote in a published note that Pfizer also could start looking harder to buy companies with strong pipelines. The analyst said that despite the big setback with torcetrapib, he was keeping a "buy" rating for Pfizer, noting he believes its pipeline is "underappreciated by the market."
Bank of America does and seeks business with companies covered in its reports, including Pfizer.