A hot new class of drugs designed to help the body's own immune system fend off cancer by blocking a protein called PD-1 is going to be big— but not nearly as big as investors think, according to a new analysis. 

Former top Nomura analyst Amit Roy, who now runs independent research firm Foveal, thinks sales of drugs inhibiting Programmed Death receptor (PD-1), or a related target PD-L1, will sell much less than expected.

"We conclude that the global anti PD-1/PD-L1 market is worth an un-risk-adjusted $10 billion a year, materially less than the optimistic (in our view) $20-30 billion forecasts in the market today," Roy said in a report on Tuesday.

PD-1 is used by tumours to evade disease-fighting cells and the ability to block the protein provides a new weapon in the fight against cancer, prompting multiple drug development programmes at leading drugmakers.

But PD-1 inhibitors only work for certain groups of cancer patients and several layers of selection are likely to be needed for patients with cancers such as breast and colorectal.

Roy said this would limit their use and there could be further downside to sales if PD-1 drugs were given for shorter periods than anticipated.

The new drugs are currently prescribed until a patient's cancer progresses. But there are a growing number of cases of very long responses, suggesting that shorter therapy may be sufficient.

Reducing the duration of therapy to eight to 16 weeks could shrink the value of the PD-1 market to just $2.9 billion to $5.8 billion, Roy said.

Bristol-Myers Squibb's PD-1 drug Opdivo is viewed as the most promising new medicine to reach the market in 2015, according to a recent Thomson Reuters Cortellis analysis.

Merck also has an approved PD-1 drug, Keytruda, and other PD-1/PD-L1 treatments are under development at range of companies including Roche and AstraZeneca.

Rising sales forecasts for such medicines have been an important driver of share prices in companies in the immuno-oncology space in the last two years.