The Dutch Regulatory Agency has declined Cosmo Pharmaceutical's Cortiment drug for the treatment of ulcerative colitis.

The decision was based on "grounds of clinical relevance", but Cosmo is awaiting a formal letter from the agency which will explain the reasons in more detail, the Swiss drug maker said in a statement.

Cosmo CEO and chairman Mauro Ajani said, "We believe that Cortiment MMX is a clinically effective option for patients with mild to moderate ulcerative colitis and we are supported in this belief by the major key opinion leaders. We are therefore assessing means to have MEB review its decision".

The rejection caused Cosmo shares to fall by 12%, the biggest decline since September 2009, pushing the company's stock to 22.65 francs, reports Bloomberg.

But approval for Cortiment hasn't been ruled out, as it will be reviewed by the US Food and Drug Administration in October 2012.

Ulcerative Colitis is a form of inflammatory bowel disease for which there is no known cure, but with appropriate treatment patients can manage their symptoms.

It is estimated that 800,000 people in the US and 900,000 people in the EU suffer from the illness.