Image source: Getty Images.

What: In one heck of a surprise, Bristol-Myers Squibb (NYSE:BMY) announced today that its world-beating checkpoint inhibitor, Opdivo, missed the mark in its phase 3 trial, dubbed CheckMate -026, as a stand-alone frontline treatment for non-small-cell lung cancer (NSCLC), causing the company's shares to drop by as much as 18.2% as of 11 a.m. EDT. Specifically, the drugmaker reported that Opdivo failed to meet its endpoint of progression-free survival in patients with previously untreated NSCLC, when pitted against an investigator's choice of  chemotherapy.

So what: This failure is certainly unexpected given that Merck & Co.'s (NYSE:MRK) rival therapy, Keytruda, met both its primary endpoint of progression-free survival and secondary goal of overall survival, as a frontline monotherapy for NSCLC less than two months ago. And, for those keeping score, this is the first time these two closely watched cancer drugs have generated completely different clinical outcomes for roughly the same indication.

Now what: Merck's Keytruda now appears to have a clear path to capture more than $4 billion in possible sales for this single high-value indication -- which is why Bristol-Myers' stock is tanking so hard today, and Merck's shares initially jumped by as much as 11% on this news.

Having said that, this double-digit drop in Bristol's share price might not be entirely warranted. Opdivo, after all, did rake in a mind-boggling $840 million in sales in the second quarter of 2016 (up 589% year over year), compared to $314 million for Keytruda. And Opdivo may yet break through for this coveted indication as part of a combination therapy later on down the road.

So, once the Street properly digests this news and realizes the sky isn't falling in regard to Opdivo's overall commercial prospects, I suspect bargain hunters will start to bid Bristol's shares back up again. Stay tuned. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.