Encysive plunges on FDA ruling

NEW YORK (CNNMoney.com) -- The stock price for biotech Encysive Pharmaceuticals plunged more than 50 percent in Monday morning trading, following an FDA decision on Friday to approve a competing heart-lung drug from Gilead while calling Encysive's drug ineffective.

The Food and Drug Administration handed Encysive (Charts) its third "approvable" letter for the drug Thelin, as a treatment for pulmonary arterial hypertension, or high blood pressure in arteries connecting the heart to the lungs. The letter said Thelin was not effective in treating the disease, also known as PAH.

But the FDA approved a PAH drug, known as ambrisentan or Letairis, from Gilead Sciences (down $0.36 to $80.47, Charts). Letairis will compete with Actelion's Tracleer, which totaled $850 million in 2006 sales. Hamed Khorsand, analyst for BWS Financial, projects that annual Letairis sales could reach $600 million by 2012.

Encysive's main competitors include Abbott Laboratories (Charts, Fortune 500) and Sanofi-Aventis (Charts).