(Reuters) – The U.S. Food and Drug Administration on Monday declined to approve Intercept Pharmaceuticals Inc’s therapy for a progressive liver disease, a setback for a possible treatment in the country for the condition that affects millions. (https://reut.rs/2ZhKnbP)

Shares of Intercept plunged 34.28% before the bell after the company said the agency found that the predicted effectiveness of the treatment is uncertain and does not sufficiently outweigh the potential risks.

The therapy, chemically known as obeticholic acid, is designed to improve fibrosis, or the build up of scar tissue in the liver caused by non-alcoholic steatohepatitis (NASH), a chronic disease related to obesity.

NASH affects around 25% of Americans and is poised to become the leading cause of liver transplants. As fat-filled diets make bigger chunks of the global population prone to developing the disease, some analysts expect the market for NASH drugs to reach up to $35 billion.

However, the industry has been littered with disappointments, including last year’s trial failure of Gilead Sciences Inc’s three-drug combination.

Intercept’s therapy has previously received the FDA’s accelerated clearance to treat a rare, chronic liver disease known as primary biliary cholangitis, and the company is currently conducting confirmatory trials to win full approval. (https://bit.ly/37Pd3wE)

(Reporting by Saumya Sibi Joseph and Trisha Roy in Bengaluru; Editing by Arun Koyyur)