Federal health advisers on Wednesday recommended against expanding approval of an OSI Pharmaceuticals lung cancer drug to patients who are already responding to chemotherapy.
The drugmaker's shares fell almost 7 percent in afternoon trading.
A spokeswoman for the Food and Drug Administration said the agency's panel of cancer experts voted 12-1 against using Tarceva as a follow-up therapy in patients who have already undergone successful chemotherapy.
The drug is already approved as a treatment for patients whose cancer has spread despite chemotherapy treatment.
The FDA is not required to follow the advice of its panels, though it usually does. A decision on Tarceva is expected by Jan. 18.
A company study of 889 patients showed Tarceva stopped cancer from progressing for about three months when taken immediately following chemotherapy.
But FDA scientists said it was unclear whether earlier use of Tarceva was any better than the currently approved indication, in which patients begin taking the drug only after their cancer has returned.
OSI company officials said the new use would "be an important advance in treating" lung cancer.
"We are disappointed with the committee's recommendation and will work diligently to respond to the issues that arose today as quickly as possible," said Chief Executive Colin Goddard, in a statement.
Tarceva is also marketed as a treatment for pancreatic cancer.
The drug is made by OSI, which is based in Melville, N.Y., and is sold in partnership with Roche's Genentech unit, which is based in South San Francisco. The drug is designed to target a cellular pathway that hastens cancer progression.
OSI Pharmaceutical's shares fell $2.51, or 7 percent, to close at $32.89.