Bayer shares plunge by more than 20% after trial of potential blockbuster drug halted

In a statement on Sunday, Bayer said that partway into a Phase III trial, its experimental anticoagulant asundexian was shown to be inferior to Pfizer PFE, +0.52% and Bristol-Myers Squibb’s BMY, +0.30% ?established Eliquis in preventing strokes in high-risk patients.

Bayer had hoped asundexian would deliver annual sales of more than 5 billion ($5.5 billion), helping to replace revenue from blood thinner Xarelto, one of its biggest sellers, which will lose protection from key European patents in 2026.

“This is a significant blow to the Bayer Pharma pipeline… Overall, this setback increases challenges facing its new CEO [Bill Anderson] – pipeline weakness and needing investment while leverage is high and beset by litigation,” said Charles Bentley, analyst at Jefferies.

The trials’ failure was “a total surprise” said analysts at Barclays, who added: “Removing asundexian from our model suggests significant challenges ahead for the company’s pharma business.”

Bayer shares tumbled 21% to their lowest in 12 years early Monday before trading down 17.8%. However, the German company’s travails did not seem to be helping its competitors much, with shares of Bristol-Myers Squibb off 3% in premarket trading and Pfizer adding less than 1%.

The sharp drop for Bayer left Frankfurt’s DAX index DX:DAX struggling to make headway, losing 0.2%, while the CAC 40 in Paris FR:PX1 rose 0.2% and London’s FTSE 100 UK:UKX shed 0.2%.

Sentiment on the U.K. bourse was hit by a profit warning from Ashtead AHT, +3.01%, whose shares fell 10% after the specialist plant hire company said fewer natural disasters and the Hollywood writers strike had trimmed demand for its equipment.

“It might seem unfair to drive a share price down by more than 10% when the profit forecast downgrade is only 2% to 3%, but investors do not seem to be in a forgiving mood when it comes to Ashtead’s less optimistic trading outlook”, says AJ Bell investment director Russ Mould.

“In many ways, the equipment hire specialist is a victim of its own success. Shareholders have enjoyed a string of upgrades to earnings estimates in the past couple of years, so even this very mild disappointment has come as a considerable shock,” Mould added.

Over in Switzerland, shares of Julius Baer? BAER, +1.89% fell 12% after the bank reduced profit forecasts amid rising credit provisions.