Drug maker Genzyme's treatment for multiple sclerosis has failed to win approval from U.S. regulators, the Associated Press reported.

The U.S. Food and Drug Administration rejected Lemtrada for launch in America's drug market on the grounds that Genzyme had not submitted sufficient evidence showing that the drug's benefits outweighed its "serious adverse effects," Genzyme said in a statement on Monday.

"We are extremely disappointed with the outcome of the review and the implications for patients in the U.S. suffering with multiple sclerosis who remain in need of alternative therapies to manage a devastating disease," Genzyme President and CEO David Meeker said in a statement. "We strongly believe that the clinical development program, which was designed to demonstrate how Lemtrada compares against an active comparator as opposed to placebo, provides robust evidence of efficacy and a favorable benefit-risk profile. This evidence was also the basis for the approvals of Lemtrada by other regulatory agencies around the world."

French pharmaceutical company Sanofi, parent of Genzyme, wants to market Lemtrada as a treatment for relapsing multiple sclerosis, an autoimmune disease in which the immune system attack healthy nerves. The condition affects the brain, spinal cord and optic nerves and can cause pain, slurred speech, impaired vision, muscle weakness and neurological problems.

The FDA is also demanding the pharmaceutical companies to carry out more clinical trials using different designs and methods prior to approvals, Reuters reported.

According to Reuters, the government agency's ruling could impact the value of Sanofi's Genzyme takeover, "since the latter's shareholders had received so-called contingent value rights (CVRs) entitling them to future payments of up to $14 a share if certain goals were met."

"Genzyme's takeover was about catching up in biologics, having a greater footprint in the United States, and largely for Lemtrada," Eric Le Berrigaud, an analyst at Bryan Garnier & Co., told Reuters. "This is unquestionably a setback, as without a U.S. market such a product doesn't have the same potential."

Lemtrada was approved by the European Medicines Agency for use in the EU, earlier this year. The drug was also approved in Canada and Australia, according to the AP.

Sanofi and Genzyme said they strongly disagrees with the FDA's decision and plans to appeal, Reuters reported.