On Friday, Amgen (NASDAQ:AMGN) announced a significant setback with cancer compound Vectibix, after a committee of the European Medicines Agency (EMEA) recommended that the drug not be approved in the EU as treatment for colorectal cancer. This development means that Vectibix won't be approved in the EU without new and more substantive clinical trial data unless Amgen is successful in its appeal.

With the setbacks that Amgen has experienced with its anemia compounds in the past several months, improved sales growth in its other compounds like Vectibix is needed to pick up the expected stagnating sales growth that will occur. Unfortunately, market-expanding clinical trials for Vectibix have turned up mixed in the past months. It's even possible that some of these results may have played a peripheral part in the EMEA's rejection of the drug.

Either way, the EMEA historically has required a larger burden of proof than the FDA when deciding whether to approve new cancer compounds. Amgen plans on appealing the EU regulators' decision on Vectibix, but appeals of this sort never have much of a chance for success. Vectibix has been approved in the U.S. since September of last year, so not all is lost with the drug.

The past two months have been unusually rough for Amgen with negative turns of events on all aspects of its operations, from its drug pipeline to its currently marketed products. Until the company releases another quarter or two of financial results, the fallout from these events in terms of reduced demand for its products won't be fully felt. How bad things get with its top-line growth will determine whether shares of Amgen are undervalued at this level.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.