Regeneron said it and its partner, Sanofi-Aventis SA , were informed late last week by the U.S. Food and Drug Administration that the drug, REGN475/SAR164877, was being placed on clinical hold after a patient in another company's trial developed avascular necrosis of a joint.

The condition is caused when bone tissue dies due to lack of blood supply, eventually causing the bone to collapse.

Regeneron's drug is designed to work by blocking a protein called nerve growth factor (NGF) that is associated with pain. An NGF-inhibitor under development by Pfizer Inc was put on hold earlier this year after some patients required joint replacement surgery.

The FDA believes its safety concerns could affect the entire anti-NGF class.

Decision Resources, a healthcare advisory firm, had originally projected peak global sales of Pfizer's drug tanezumab could reach $1.2 billion, but reduced that forecast to $200 million after it was placed on clinical hold.

Tanezumab was the most advanced in the class and its setback cast a cloud over other drugs in development, including Regeneron's. Johnson & Johnson and Abbott Laboratories each have early stage anti-NGF programs.

Shares of Regeneron fell 0.7 percent to $33.27 in mid-morning trading on Nasdaq, in line with a 0.6 percent decline in the Nasdaq Biotech Index.

Regeneron said there are currently no trials with the drug that are enrolling or treating patients.