The Cambridge-based biotechnology firm Biogen, Inc. suffered a major setback this week, as the firm announced that it will stop most work on a the blood-thinning drug hirulog.

Following the announcement, the company's stock plunged more than 18 percent, or nine points, to finish at 40 after heavy trading Tuesday.

The drug, a blood thinner intended to rival the popular product heparin, was one of the company's two most important ongoing projects. The Boston Globe reported Tuesday.

But Biogen officials are putting a positive spin on the setback, which has forced the company to take a $25 million pretax charge against its earnings, eliminating profits for the third quarter of the fiscal year.

The Cambridge company will lay off none of its 425 employees, according to Director of Communications Kathryn R. Bloom.

"We will continue to hire," Bloom said.

The company remains one of the largest biotechnology firms in the country and will continue working to become a "integrated pharmaceutical company developing drugs and marketing them," despite this failure, Bloom said.

Hirulog didn't demonstrate "a statistically significant effect compared to heparin," a stipulation needed for the drug to pass the high-level tests it was undergoing, Bloom said.

Heparin is used in angioplasty, a surgical process in which blocked arteries are dialated by the inflation of an inserted balloon.

Officials at the firm refused to say how much research money was invested in the failed drug.

Bloom said she does not expect Biogen's failure with Hirulog to discourage other firms in the industry from putting money into research and development. Beta interferon, another of Biogen's new drugs, is a "very promising and encouraging" drug used to battle multiple sclerosis, Bloom said. The drug has passed all clinical testing and will be filed with the U.S. Food and Drug Administration for approval in early 1995, she said.

"We are very positive about our beta interferon," Jim Vincent, Biogen chair and CEO, said yesterday. "We now expect to operate profitably in the fourth quarter."