Serious Setback for Sanofi

Updated from 5 p.m. EDT

Medical advisers to the Food and Drug Administration said Wednesday that the agency should reject a weight-loss drug from Sanofi-Aventis (SNY) because the medication's risks appear to be greater than its benefits.

The panel first voted 14-0 that the company hadn't provided enough information on the safety of the drug called Zimulti. Then, the experts unanimously recommended that the FDA reject it.

The FDA isn't bound by its advisers' recommendations, but it usually follows them. The FDA is scheduled to make a formal ruling in late July.

For Sanofi-Aventis, the panel's decision is a major blow. The drug, under the name Acomplia, is sold in several foreign markets, primarily countries in the European Union. Sanofi-Aventis has been counting on the U.S. as its biggest market for what many analysts had forecast would provide annual sales of $1 billion or more.

Zimulti has been plagued by regulatory setbacks in the U.S. The major issue is the concern that the drug increases the risk of suicidal thinking.

A Monday report by the staff of the FDA said a review of clinical trials showed 26% of patients taking the recommended dose of Zimulti had psychiatric side effects. By contrast, 14% of those receiving a placebo exhibited these side effects. The report added that the drug achieved a statistically significant weight loss when compared with a placebo.

The panel's decision came after markets had closed. In regular trading, shares of Sanofi-Aventis were off $1.31, or 3%, to $42.64 as investors became nervous about Zimulti's fate. After hours, the stock fell another 43 cents, or 1%.