Drug Drop Slams Pfizer

Updated from 12:12 p.m. EST

Pfizer's(PFE) shares plunged Monday as investors reacted with fury to the company's decision to stop working on a cholesterol drug that had been viewed as the foundation for the years ahead.

In a staggering setback for its research efforts and an ominous warning about future sales and earnings growth, Pfizer said Saturday night that it would halt development on torcetrapib because more deaths than expected occurred in a big clinical trial.

Shares of Pfizer dropped $2.96, or 10.6%, to $24.90 in extremely heavy trading. The stock sank as low as $23.50. Nearly 290 million shares changed hands, roughly nine times the average volume.

Following Pfizer's announcement, several Wall Street analysts reduced their ratings on the stock, and Moody's placed the drug giant's Aaa long-term debt grade on review for a possible downgrade. Aaa is Moody's highest rating.

The stunning announcement from Pfizer came only two days after executives met with analysts and said they expected to seek regulatory approval for torcetrapib in the second half of next year if a series of clinical trials proved successful. Results had been scheduled for late March.

These trials had different goals than the one that led Pfizer to cancel its work on torcetrapib. They were focusing primarily on how well a combination of torcetrapib and Lipitor acted on cholesterol and reduced artery-clogging plaque, a major cause of heart disease and heart attacks. The tests compared the combination pill to Lipitor, the world's best-selling drug, on its own.