Serious Setback for Sanofi

An FDA panel says a weight-loss drug should be denied approval.
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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) - Get Report

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%.

The Sanofi-Aventis drug has been before the FDA since April 2005. Since the application was filed, the agency had asked the company for more information about potential psychiatric side effects.

Sanofi-Aventis said earlier this week, in documents released on the FDA's Web site, that it would implement a plan "to minimize identified and potential important risks," namely "depressive disorders, including the potential for suicidality-related events," anxiety, sleep disorders and dizziness.

"Since obesity is a chronic disorder, short-term use is not recommended and the company does not intend to promote the product for short-term cosmetic use," Sanofi-Aventis said. The company said the benefits outweigh the risks.

Prior to the advisory panel meeting, some analysts feared that the committee would ask for more clinical trials -- an expensive, time-consuming effort -- or recommend that the drug be approved with strict limits.

The Zimulti vote came two days before a new weight-loss drug from

GlaxoSmithKline

(GSK) - Get Report

reaches the U.S. market.

Glaxo's drug, called Alli, will be sold

over-the-counter. Alli is a half-strength version of the prescription weight-loss drug Xenical from

Roche

.

Xenical has had only modest success in the U.S., as has another prescription weight-loss drug, Meridia, from

Abbott

(ABT) - Get Report

. An abundance of side effects and a lack of insurance coverage have suppressed their showings.