What happened

Shares of Puma Biotechnology Inc. (NASDAQ:PBYI), a U.S. biotech seeking approval of its breast cancer therapy in the EU, were hit hard after European regulators signaled big trouble for the company's lead drug. The stock was down 26.4% at 10:50 a.m. EST on Wednesday.

So what 

In the U.S. last year, Puma Biotechnology launched neratinib under the brand name Nerlynx as a long-term treatment to prevent a form of breast cancer from recurring after initial chemotherapy. The stock is getting hammered today because the company disclosed that the European Medicines Agency (EMA) will probably ask for more information before it will allow Puma to market its drug in the eurozone.

A woman looking at a laptop with a disturbed expression while covering her mouth with her left hand.

Image source: Getty Images.

These patients tend to stay on therapy for a long time, a feature that magnifies safety concerns. The Committee for Medicinal Products for Human Use (CHMP), which issues nonbinding approval recommendations to the EMA, indicated the clinical efficacy evidence in Puma's application just isn't strong enough to overcome safety concerns.

Now what

It's important to note that the CHMP isn't scheduled to vote on the matter until February. If Puma's warnings materialize into a negative vote, as expected, the EMA isn't required to follow the recommendations.

The door to a 2018 launch of neratinib in the EU isn't entirely shut, but it sure looks grim. That makes U.S. sales figures even more important. We'll get a look at just how well the Nerlynx launch is proceeding when the company reports 2017 results, probably around the end of February.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.