Bristol-Myers shares bombed after it failed a key study — and its biggest rival is surging (BMY, MRK)

Shares of Bristol-Myers Squibb were hit hard Friday after news that its blockbuster cancer drug failed a key clinical trial.

The drug, called Opdivo, is one of a new set of drugs called immunotherapy. The drug targets the programmed cell death 1 (or PD-1) receptor to essentially take the "foot off the brake pedal" in the immune system, so that the immune system can go after the cancer cells.

The trial was for patients with previously untreated non-small cell lung cancer, a common form of lung cancer.

The trial "was designed to answer the question of the benefit of Opdivo monotherapy in a broad patient population. Unfortunately, this trial did not meet its primary endpoint of progression-free survival in patients whose tumors expressed PD-L1 at ≥ 5%," BMS said in a statement.

BMS was down as much as 17% Friday morning, erasing nearly $21 billion in market value.

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Morgan Stanley analyst David Risinger said in a note that he had downgraded BMS to equal-weight on the news. "We had assumed Bristol would continue to one-up competitors via smarter and broader immuno-oncology drug development. We are significantly lowering our Opdivo revenue projections and EPS," he said in a note.

Opdivo, which has already been approved to treat other forms of cancer, has been a big hit for BMS, bringing in $840 million in second-quarter sales alone.

In comparison, its main anti-PD-1 immunotherapy competition, Keytruda, made by Merck, made $314 million in sales the same quarter.

However, in June, Keytruda succeeded in its trial, which was designed a bit differently, treating patients with non-small cell lung cancer who hadn't received any prior treatments.

Merck was up 6% Friday morning on the news of BMS's trial.

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