Gilead Sciences

(GILD) - Get Report

said late Tuesday that U.S. regulators refused to approve the company's experimental cystic fibrosis drug.

The Food and Drug Administration issued Gilead a complete response letter for aztreonam lysine, an inhaled antibiotic used to treat infections in cystic fibrosis patients. The FDA informed Gilead that the drug couldn't be approved at this time and that an additional clinical study would be needed, according to a Gilead statement.

Gilead shares closed Tuesday at $49.83 but fell 2.7% to $48.50 in extended trading as investors had widely expected full approval for aztreonam lysine.

The FDA's rejection of aztreonam lysine is a rare setback for Gilead's management team, which has a reputation for near-flawless execution. Still, aztreonam lysine wasn't expected to be a significant revenue driver for the company, with peak annual sales estimated in the $300 million to $500 million range.

Gilead is on track to record more than $5 billion in total revenue this year.

A Gilead spokeswoman says the company's next step is to meet with the FDA to see whether further analysis of the current aztreonam lysine clinical data could lead to approval. The company isn't offering any details on what the FDA doesn't like about the current application.

If Gilead is forced to run a new clinical trial for the drug, approval could be delayed by 18 months.

Aztreonam lysine is still under review by European drug regulators.

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