Novartis Hit by FDA Delay - TheStreet

Novartis Hit by FDA Delay

The agency wants more testing on an experimental diabetes drug.
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Novartis

(NVS) - Get Report

suffered a big setback Monday as the company announced that the Food and Drug Administration wants more clinical testing of the experimental diabetes drug Galvus.

"We are confident in the safety and efficacy of Galvus and will continue working closely with the FDA to agree on what final actions are required to obtain U.S. approval," said Dr. James Shannon, global head of development for Novartis' prescription drug business, in a prepared statement.

The FDA said that before it can grant final approval for Galvus, the company will need to conduct a clinical trial of patients with kidney problems. Novartis also said the FDA wants additional data, but it didn't provide details.

Novartis didn't discuss a timetable for conducting the tests, but the drug certainly won't be available in the U.S. this year. The question is when might Galvus be approved next year. Novartis said the FDA's decision won't affect its 2007 financial guidance, announced in January, for its prescription drug division or the entire company.

This is the second regulatory delay for Galvus, which belongs to a new class of drugs called DPP-4 inhibitors. In November, the FDA asked for an extra three months to review the once-a-day pill. The agency asked questions about data showing that Galvus produced skin lesions in some test monkeys.

Novartis said Monday that these lesions didn't show up in clinical trials involving people who had received the drug for up to 24 months.

The regulatory delay pushes Novartis further behind

Merck

(MRK) - Get Report

, whose DPP-4 inhibitor Januvia got FDA approval in October.

DPP-4 inhibitors have attracted doctors and analysts because the drugs control blood sugar levels in two different ways. They stimulate the pancreas to produce more insulin, and they tell the liver to produce less sugar. Insulin is the protein hormone that helps convert sugar into energy.

Januvia and Galvus are designed for people with type 2 diabetes, the most common form of the disease. These diabetics can't produce enough natural insulin, or their bodies don't adequately process insulin.

Novartis submitted its application to the FDA 13 months ago seeking approval for Galvus as a stand-alone therapy and as a treatment with other diabetes drugs. The company sought European Union approval in August.

Four weeks ago, Merck received a favorable ruling from an EU regulatory agency for Januvia. Merck needs an official vote from the European Commission, which could come in a few weeks, to begin selling Januvia. Merck also expects to hear from the FDA in March on its application for Janumet, which combines Januvia and metformin, a generic blood sugar-control medication.

Novartis shares were down 2.8% to $57.03. Merck was up 3.3% to $44.35.