Imagine that last week, someone asked you to predict the best-selling drug of the next 10 to 15 years. It's not a trivial question, since tens of billions of dollars' worth of that drug would be sold, richly rewarding investors in the company lucky enough to make it. At the time, Pfizer's (NYSE:PFE) torcetrapib seemed like the best answer to that question -- but a new set of clinical trial results has thoroughly crushed those hopes.

Torcetrapib is a novel new kind of cholesterol medication designed to raise HDL cholesterol. HDL, short for high-density lipoprotein, represents the "healthy" kind of cholesterol that helps to remove other cholesterol from the arteries. LDL cholesterol, short for low-density lipoprotein, is the "lethal or lousy" kind that clogs arteries and causes heart attacks.

Statins lower LDL cholesterol, and they've been shown to prevent heart attacks and strokes. They also make tons of profit for drug companies, since this class is the best-selling of all drug classes. But since statins only reduce the risk of heart attack by about one-third, a better therapy is needed.

It's been much harder to develop drugs that raise HDL cholesterol levels. Statins and fibrates (drugs like Tricor, made by Abbott Laboratories (NYSE:ABT)) raise HDL levels modestly. Niacin, a B-vitamin available over the counter, raises HDL levels, but it also causes flushing and is not very well-tolerated. Studies have shown that patients who raise their HDL levels have fewer heart attacks, spurring the quest for a new type of drug to raise HDL levels. Hence the excitement about torcetrapib.

Pfizer has made tens of billions of dollars selling its statin Lipitor, the world's best-selling drug, with annual sales topping $12 billion in 2005 alone. Three statins, simvastatin (brand name Zocor), pravastatin (brand name Pravachol), and lovastatin (brand name Mevacor) are now available as generic drugs. Lipitor also faces competition from brand-name drugs Crestor, made by AstraZeneca (NYSE:AZN), and Vytorin, a tablet that combines Zocor with another cholesterol-lowering medication called Zetia, co-marketed by Schering-Plough (NYSE:SGP) and Merck (NYSE:MRK). With Lipitor going off-patent in 2010, Pfizer needed a new blockbuster drug to replace its sales and profits.

Torcetrapib inhibits cholesterol ester transfer protein (CETP), and it's the first drug of this class studied. An article published in the New England Journal of Medicine in April 2004 by Dr. Margaret Brousseau and others described 19 patients with low HDL levels who received torcetrapib. The results were fantastic: Treatment with a 120 mg tablet of torcetrapib raised HDL levels by 46%, treatment with torcetrapib and Lipitor together raised HDL levels 61%, and treatment with torcetrapib 120 mg twice daily raised HDL levels by a phenomenal 106%!

Everyone knew torcetrapib would be a blockbuster drug; some analysts projected annual revenues of $20 billion. Pfizer's initial approach was to ask the FDA to approve torcetrapib only in combination with Lipitor. This "bundling strategy" was marketing brilliance, but medically controversial, with many physicians angry about this tactic.

Scientific concerns arose when preliminary data showed that the drug raised blood pressure slightly, but many thought that this finding would turn out to be a minor effect. After all, there are many blood pressure medications available to treat hypertension. It was more bothersome that no one was exactly sure why a drug designed to raise HDL levels would also raise blood pressure.

Some bad press notwithstanding, all that stood between torcetrapib and financial nirvana were clinical studies demonstrating its safety and efficacy. Last Thursday, Pfizer CEO Jeffrey Kindler announced that Pfizer was planning to file with the FDA in late 2007, requesting approval to market the torcetrapib-Lipitor combination.

But Saturday, Kindler announced that Pfizer was stopping all trials involving torcetrapib, after clinical data showed more deaths and cardiovascular events occurring among patients who took it. He said that the clinical trial monitoring board's recommendation to stop all studies was "surprising and disappointing."

I wholeheartedly agree. At one level, it is very surprising that Pfizer spent $800 million in research and development on torcetrapib, and was so far along in testing, before this problem surfaced. Then again, Vioxx's problems surfaced years after its approval. The fickle nature of new drugs' clinical trials should be a cautionary tale for investors in companies with new biotech drugs under evaluation. On a larger scale, the loss of a new treatment for heart disease that could possibly have saved millions of lives is very disappointing.

With Pfizer shares declining because of the bad news, is now a good time to buy? Perhaps history will help serve as a guide. After Vioxx was recalled in September 2004, Merck's stock price went from $45 to $30, then to just above $25. In 2005, Merck's price increased to around $35, then dropped back to around $25 that October. Since then, its price has climbed back up to around $45. A large decline in Pfizer's share price may give investors a similar opportunity.

Pfizer is a Motley Fool Inside Value pick. Discover Philip Durell's full list of the market's most tempting bargains with a free 30-day trial. Merck was once an Income Investor selection.

Fool contributor Dr. Michael Cecil is a cardiologist and the author of Drugs for Less: The Complete Guide to Free and Discounted Prescription Drugs. If you would like to discuss this article, email him at Fool has a disclosure policy, and Dr. Cecil does not own any of the stocks mentioned in the article.

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.