Biopharmaceutical company

Immunex

(IMNX)

lost half its market value -- $5 billion -- in after-hours trading Thursday because of some bad news on the company's drug development front.

The Seattle-based company closed up 88 cents, or 5%, to $18.88 in the regular session, but plunged 47.7% to $9.87 in after-hours

Instinet

action.

The hatchet job performed by investors after hours illustrates just how fragile biotech stocks can be when drug development plans go awry. The reaction was clearly exacerbated by the ongoing slump in biotech stocks. The

American Stock Exchange Biotechnology Index

was up slightly today but is off about 33 % for the year.

In this case, Immunex was counting on expanding the use of its top-selling rheumatoid arthritis drug, Enbrel, to also help patients with chronic heart failure. Those plans were put on the shelf Thursday after early testing of the drug proved it didn't work for heart failure. Analysts had predicted Enbrel sales of $1 billion if it could have been used for heart failure.

The company reported Enbrel sales of $652 million in 2000. Last month, the company issued 2001 sales estimates of $750 million, lower than expected because of production problems.

Immunex also was dinged on news that an experimental drug for asthma, Nuvance, proved to be ineffective in two early clinical trials. A third study is still under way, with results expected later this year.

Company executives, speaking on a conference call, tried to compensate for the double dose of bad news with positive results from efforts to expand the use of Enbrel into another form of arthritis. But analysts and investors were not listening.

"Two pieces of bad news and one piece of positive news is clearly negative," says analyst Jan Medina of

ING Barings

, speaking before Immunex's conference call. (Medina had a buy rating on Immunex, and his firm has done no underwriting for the company.)