TOKYO (Reuters) - Shares of Japan's Eisai ( ESALF ) tumbled 11% and were on track for their biggest one-day fall in three years on Monday, after the European Union's regulator rejected the drugmaker's Leqembi treatment for early Alzheimer's disease.

The EU drugs regulator last week said the risk of serious brain swelling did not outweigh the drug's small impact on slowing cognitive decline.

Both Eisai ( ESALF ) and partner Biogen have said they will seek re-examination of the recommendation, but did not disclose what information they would provide the regulator.

"Because EU approval was broadly expected, we consider this a very big negative surprise," Jefferies analyst Stephen Barker wrote in a note to clients.

"Rejection by the EU might also hurt Leqembi's image in the U.S. and Japan, potentially hurting sales in those markets as well."

Eliminating European Leqembi sales from estimates could mean an eventual cut of overall sales estimates by around 20% and reduce the "fair value" of Eisai ( ESALF ) shares about 1,000 yen each, Barker said.

Shares of Eisai ( ESALF ) fell 11% in morning trade in Tokyo to 5,890 yen and were on track for their biggest one-day fall since July 2021.

That came after shares of Biogen fell around 7% in U.S. trading on Friday.

The therapy, also known as lecanemab, is approved in the U.S., China, Hong Kong, Israel, Japan and South Korea, and would have been Europe's first drug to treat the neurodegenerative condition rather than its symptoms.