The space for oral rheumatoid arthritis treatments won't be getting crowded quite as quickly as some might have been expecting. Gilead Sciences (GILD 3.27%) told investors on Tuesday that the FDA has issued a complete response letter (CRL) denying approval for its drug candidate filgotinib -- for now -- and dealing a huge blow to the company's cash flow projections.

An FDA approval for filgotinib had been widely expected, and forecasts of its market potential suggested it would likely become a blockbuster. Sales had been expected to exceed $1 billion in 2022 and peak above $4 billion annually.

This setback for Gilead's drug will give recently launched oral rheumatoid arthritis (RA) treatments from AbbVie (ABBV 1.77%) and Eli Lily (LLY -2.10%) more time to establish their footholds in the highly lucrative market for immune system suppressants that safely prevent the disease from progressing. 

A very upset doctor.

Image source: Getty Images.

AbbVie's injectable RA treatment, Humira is the world's top-selling drug; its annual sales peaked at $19.9 billion in 2018. In 2019, AbbVie launched Rinvoq, an oral RA treatment similar to filgotinib that generated an annualized $596 million during the second quarter. 

Rinvoq and a similar RA treatment from Eli Lilly called Olumiant have both been associated with life-threatening blood clots, though that side effect has been extremely uncommon. Because it has exhibited fewer serious side effects during clinical trials, filgotinib was expected to give Rinvoq and Olumiant fierce competition. 

According to Gilead Sciences, the FDA wants to see data from ongoing studies designed to measure whether or not filgotinib impacts sperm counts. An ongoing study to assess testicular safety that began in 2017 isn't expected to produce preliminary results until January 2021, which means it's going to be at least another year before the FDA takes another look at filgotinib.