Edgewise Therapeutics (EWTX, Financials) was downgraded by Scotiabank after disclosing safety concerns in a mid-stage clinical trial for its investigational heart disease drug, EDG-7500. The brokerage lowered its rating to Sector Perform from Sector Outperform and cut the stock's price target to $14 from $50. Shares fell 18.4% to $12.66 as of 11:36 a.m. Eastern Time on Thursday.

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Hypertrophic cardiomyopathy was the subject of the study. This is a disease where the heart muscle gets thicker, which can block blood flow and cause heart failure. The company revealed some good results from the study, but Scotiabank pointed out some adverse events that could make it hard to sell the drug.

The company says that two of the trial participants got dangerous cases of atrial fibrillation and that one person quit the study because they felt a little dizzy. Atrial fibrillation has been seen with other cardiac myosin inhibitors, but the company said that the small number of cases in the trial group took away from one of EDG-7500's main benefits, which is that it is thought to be safer.

Analyst Louise Chen at Scotiabank said that these side effects call into question the drug's overall safety story, which was what made it different from other drugs on the market. The firm said that the change could make it harder for the drug to get a place in the heart medicine market, which is getting more and more competitive.

Edgewise has said that EDG-7500 can reduce left ventricular outflow tract gradients and improve diastolic relaxation without impairing ejection fraction. While the company maintains that these benefits remain evident in the study data, Scotiabank cautioned that the appearance of atrial fibrillation may hinder adoption if physicians weigh safety risks more heavily in prescribing decisions.

Edgewise Therapeutics is working on EDG-7500 as a possible new treatment that might work like current heart myosin inhibitors but have fewer side effects. But based on what we know so far about this study, that difference may now be in doubt.