Pharmaceutical company Elan and its partner Biogen say the European Medicines Agency have turned down an application for its Tysabri treatment to be used in patients with Crohn's disease.
Elan's shares tumbled in Dublin after the news.
The companies say they plan to apply for a re-examination through an appeals procedure. A decision is expected by the first quarter of 2008.
A similar application for Tysabri in the US was filed late last year. The US authorities are due to discuss this application at the end of this month.
Around one million people worldwide have Crohn's disease, a chronic and progressive inflammatory disease of the gastrointestinal tract.
Elan shares closed down 90 cent, or 5.7%, at €14.64 in Dublin this evening.