The failure of Bristol-Myers Squibb Co.'s immuno-oncology drug combination Opdivo and Yervoy in a late-stage small cell lung cancer trial could put the company out of the running in the race to top the market for the difficult-to-treat cancer, analysts say.

Bristol-Myers said Nov. 26 that Opdivo and Yervoy failed to help patients survive significantly longer than placebo in a late-stage small cell lung cancer trial for patients whose disease has spread. The miss for the combination is the second for Bristol-Myers in two months involving Opdivo in the small cell lung cancer, or SCLC, space.

Also known as nivolumab, Opdivo is a checkpoint inhibitor — a tumor-targeting drug that blocks the PD-1 arm on healthy cells from linking up with a partner arm on the surface of cancer cells to facilitate the spread of the disease. The therapy is already approved for previously treated patients with the more common lung cancer subtype, non-small cell lung cancer.

Opdivo showed promise in August as the first U.S. Food and Drug Administration-approved immuno-oncology treatment for SCLC, a difficult-to-treat cancer. It was the first medicine cleared for the disease in over 20 years but was relegated to a third-in-line treatment for use only after chemotherapy and at least one other treatment have failed.

The medicine has since floundered in two phase 3 trials as Bristol-Myers sought to move the therapy up in the line of priority treatments.

The first roadblock was the study called CheckMate-331, which tested the drug as a second-line treatment for SCLC after chemotherapy. The results of that study, reported in October, showed that the drug was not significantly better than chemotherapy at prolonging patients' lives. The latest failure came in a trial called CheckMate-451, which combined Opdivo with the immune system booster Yervoy.

These trial results have given analysts reason to write off Bristol-Myers' chances of obtaining the coveted second-line position for this type of lung cancer in the near term.

"The failure of CheckMate-451 is a significant miss for Bristol-Myers," said Cowen's Steve Scala in a Nov. 27 note. "Without a first-line Opdivo and chemo combination study as part of the development strategy, it appears Bristol-Myers is out of near-term opportunities to advance Opdivo into second-line therapy or first-line maintenance."

Evercore analyst Umer Raffat also questioned Bristol-Myers decision not to seek a "clear" trial for a first-in-line indication for Opdivo.

The SCLC space has stymied drugmakers as few improvements have been made over the years, but immuno-oncology drugs from Bristol-Myers' rivals have begun to make some headway.

Scala said Switzerland's Roche Holding AG's Tecentriq is closest to gaining approval for SCLC as a first-line treatment with chemotherapy based on results from a late-stage trial called IMpassion133. The trial demonstrated that Tecentriq prolonged patients' lives significantly. The company plans to file for the indication by the end of the year.

In a mid-stage study, Merck & Co. Inc. showed that its blockbuster immuno-oncology drug Keytruda combined with chemotherapy also increased survival for patients with SCLC.

Cowen estimates that the worldwide market for SCLC could be worth $40 million in 2018, $110 million in 2019 and $430 million by 2024.

Raffat said the setback for Bristol-Myers means the SCLC indication is in jeopardy, but that Bristol-Myers can likely keep its immuno-oncology sales relatively flat at current levels as SCLC represents less than 5% of Opdivo sales overall.