Updated from 9:37 am EST with analyst comments defending Axovant.
The disclosure Tuesday that Pfizer (PFE) shelved an Alzheimer's drug candidate because of disappointing efficacy is having a negative impact on the market value of Axovant Sciences (AXON) , which is developing a similar Alzheimer's drug.
In an update to its drug research pipeline, Pfizer said a mid-stage study of Alzheimer's drug candidate PF-05212377 was terminated on Oct. 23 after independent data monitors determined the drug would not demonstrate a benefit in patients with mild to moderate Alzheimer's.
The Pfizer drug was designed to target a receptor in the brain known as 5HT6.
Axovant is also developing an Alzheimer's drug, RVT-101, which targets the same 5HT6 receptor.
Shares of Axovant fell 24% to $12.69 Tuesday as investors viewed the Pfizer setback as a new risk to the RVT-101 clinical program.
Axovant is currently conducting a phase III study of RVT-101 in patients with mild to moderate Alzheimer's. Results from the study are not expected until the second half of 2017.
The Danish drug company Lundbeck is developing its own 5HT6-targeted drug, which is now in a phase III study with results expected in early 2017.
The Pfizer phase II study was designed to determine if PF-05212377, taken for 12 weeks, could improve the cognition and memory of mild to moderate Alzheimer's patients who were still experiencing symptoms while on a stable dose of Aricept. An interim analysis, conducted in October, determined the futility of PF-05212377. Pfizer disclosed the study's failure on Tuesday in conjunction with reporting of 2015 earnings.