NEW YORK (Reuters) - A setback for Merck & Co's MRK.N key cancer drug sent the drugmaker's stock swooning on Monday for a second straight session, putting the shares on track for their biggest two-day decline in more than eight years.

The logo of Merck is pictured in this illustration photograph in Cardiff, California April 26, 2016. REUTERS/Mike Blake/Illustration/File Photo

Late on Friday, Merck withdrew an application for European use of its flagship drug Keytruda as an initial, or first-line, treatment for advanced lung cancer in combination with chemotherapy, raising questions about future sales.

The Keytruda/chemo combination is already approved in the United States based on initial promising data. But the company determined that a similar European first-line approval without more mature late-stage data was unlikely.

Lung cancer is by far the most lucrative oncology market with first-line approval providing access to the most patients.

In the wake of the news, at least three analysts cut their ratings on Merck's stock, a component of the blue-chip Dow Jones Industrial Average .DJI, while other analysts lowered their target prices for the stock.

“We are downgrading MRK shares to Equal Weight from Overweight based on diminished upside potential from Keytruda, which is by far Merck’s biggest value driver,” Barclays analyst Geoff Meacham said in his downgrade note.

Aside from the European withdrawal, Meacham and other analysts also cited delays for another Keytruda study, revealed on Friday morning. Merck said a decision to make overall survival a main goal for a large, pivotal lung cancer trial of Keytruda plus chemotherapy would delay those results until February 2019.

Merck shares fell 5.6 percent to $54.95 on Monday, touching their lowest point since May 2016. The stock had dropped 6 percent on Friday following the company’s third-quarter results.

The drugmaker said that the cost of a June cyber attack that temporarily crippled manufacturing coupled with lower sales of off-patent products caused its third-quarter revenue to fall 2 percent to $10.33 billion, even as Keytruda sales topped $1 billion for the first time.

The combined, roughly 11-percent two-day decline for Merck shares would be the biggest since February 2009.

Merck's setback boosted shares of Bristol-Myers Squibb Co BMY.N, which sells a rival cancer therapy. Bristol-Myers shares were up 1.6 percent.

Pharmaceutical stocks have endured a rocky month so far as earnings results have poured in. The NYSE Arca Pharmaceutical index .DRG is down 2 percent in October against a 2.1 percent rise for the overall S&P 500 .SPX.

Pharmaceutical heavyweight Pfizer Inc PFE.N is set to report results on Tuesday.