NEW YORK (CNN/Money) - Shares of Merck & Co. fell more than 5 percent Friday after the drugmaker said it withdrew a new drug application for an arthritis treatment to add more information and projected first-quarter profit at the low end of analysts' estimates.

Merck (MRK: down $3.87 to $59.57, Research, Estimates) said it will add data about treatment for chronic spinal inflammation in a new application to the U.S. Food and Drug Administration for its Arcoxia medication to make the drug more competitive.

The company did not provide a timetable for the expanded application but said the regulatory process outside the United States is not affected.

"This drug would have had some of the broadest indications in its class. It's unusual that a company pull an application for a small application such as ankylosing spondylitis [inflammation of the spine]," said Adam Greene, pharmaceutical analyst with Dresdner Kleinwort Wasserstein. "The FDA could have had some concerns with the drug. [A withdrawal] is not out of left field, but it is rare."

Goldman, Sachs & Co. followed Merck's withdrawal by downgrading the stock to "market outperformer" and cutting earnings estimates for the company, saying if Merck refiled the application tomorrow, Arcoxia would not reach the market for another 10 months, while Pharmacia's Celebrex and Bextra continue to take market share without meaningful competition.

Goldman also cut its price target on Merck shares to $68 from $70.

Merck planned to release Arcoxia as a successor to its blockbuster Vioxx arthritis medication. The company maintained 2002 sales guidance for this class of drugs at $2.8 billion to $3.1 billion.

In addition, Whitehouse Station, N.J.-based Merck said it expects to earn 69 cents to 72 cents a share in the first quarter. Wall Street expects the company to report a profit of 72 cents a share, according to First Call.

Merck also said it sees earnings in fiscal 2002 flat with the prior year, although it expects higher growth in the second half of the year than the first, and it anticipates double-digit earnings growth in fiscal 2003.