It's been a tough stretch for Celgene Corporation (CELG) , which has been hammered over the past few months.

At the start of the fourth quarter, Oct. 1, Celgene stock was trading for $146. After its 9.04% decline on Wednesday, though, shares ended the day at just $87.12.

The 40% decline has been a tough pill for investors to swallow, especially after many had considered this a best-in-breed name. Celgene's latest fall is due to the FDA rejecting an application for one of its new drugs, TheStreet's Jim Cramer pointed out on CNBC's "Stop Trading" segment.

Back in July 2015, Celgene was looking to diversify away from its dependency on its key drug Revlimid. As a result, it bought Receptos for $7.2 billion, which had a promising multiple sclerosis drug in ozanimod.

Due to insufficient data on the application, the FDA rejected Celgene's application for ozanimod. What does this mean? Ultimately it means the drug, which has a lot of potential for Celgene, will be delayed. For how long, we don't know.

Did Celgene overpay in its deal for Receptos? "It's sure looking like it" after how management has executed with the drug, said Cramer, who also manages the Action Alerts PLUS charitable trust portfolio.

Ozanimod looked like a great drug, but right now the deal to acquire it isn't working out for Celgene, he concluded.

At the time of publication, Cramer's Action Alerts PLUS had no position in any security mentioned.

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