The news sent Celgene's shares down as much as 2 percent.

Celgene submitted an application for approval of the drug, Istodax, based on an open-label mid-stage study, meaning there was no comparator arm in the trial.

The U.S. Food and Drug Administration approved the drug based on the same trial data last year but advisors to the European Medicines Agency recommended against approval, saying the lack of a comparator arm made it difficult to assess the drug's relative benefits and risks.

Celgene said regulators acknowledged that the drug, also known as romidepsin, demonstrated anti-tumor activity, and the company said it remains convinced that the drug represents an important new therapy for a disease in which patients have very few options.

The rebuff from the Europeans is the second in a month for Celgene. In June the company withdrew an application to market its blood cancer drug Revlimid for a broader patient population after European regulators asked for more information proving the drug's benefits outweighed its risk.

Istodax generated sales of $30 million in 2011, a tiny percentage of Celgene's $4.8 billion in revenue for the year.

Celgene said it plans to open a bigger, Phase III trial in PTCL for previously untreated patients this year. The company gained Istodax with its acquisition in late 2009 of Gloucester Pharmaceuticals.

Celgene shares were down 2.1 percent to $66.57 in late morning trading on Nasdaq. Earlier in the day they fell as low as $66.52.

(Reporting By Toni Clarke; Editing by Tim Dobbyn)

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