The FDA dashed investors' high hopes for InterMune on May 4, sending the company's shares crashing as it rejected the lung disease drug, Pirfenidone, instead of approving it as expected. In a letter to the company, the agency asked InterMune to conduct an additional clinical trial to support the efficacy of Pirfenidone in patients with idiopathic pulmonary fibrosis, a fatal lung disease that affects about 200,000 people in Europe and the United States combined.

InterMune shares fell by 75 percent to $11.38 on the news, from a pre-decision close of $45.44.

Dan Welch, CEO of Intermune expressed disappointment over the FDA’s decision and said the company will meet with the agency as soon as possible to determine how to move the drug forward.

InterMune's bid for Pirfenidone approval had been fast-tracked by the FDA, reflecting in part the agency's desire to speed a potential therapy for IPF to market in the absence of other treatments. Bosentan, a drug for pulmonary arterial hypertension created by the Swiss biopharmaceutical Actelion was in late stage testing for IPF, but it failed to reduce deaths in testing.

Whether InterMune will forge ahead with Pirfenidone is unclear. Running a new trial could prove costly for the company and wouldn't guarantee the drug's approval. InterMune also has a mid-stage treatment for Hepatitis C in development.

Pirfenidone, also known by its trade name Esbriet, is still up for approval in the European Union. InterMune submitted a marketing authorization application there in March. The drug has already been approved in Japan.