A long-acting diabetes drug from Amylin Pharmaceuticals ( AMLN) and Eli Lilly ( LLY) allows diabetes patients to control their blood sugar levels better than currently approved drugs, according to results from a phase III study released today.

The drug, Byetta LAR, is given as a once-weekly injection. In a 30-week study, Type 2 diabetes patients on Byetta LAR achieved a 1.9% improvement in A1C, a key measure of glucose (blood sugar) control. This compares to an A1C improvement of 1.5% for patients using regular Byetta injection, a currently approved drug that is given twice a day.

This result showed Byetta LAR to be statistically superior vs. regular Byetta.

In addition, patients in both arms of the study achieved an average weight loss of eight pounds. From a side-effect perspective, the companies said LAR patients reported 30% less nausea than patients on regular Byetta.

Byetta LAR used a drug delivery technology from Alkermes ( ALKS) that allows it to be given just once a week. Once LAR is approved and on the market, Alkermes will receive a 7%-8% royalty on net sales.

Shares of Amylin closed Tuesday at $46.80 and were up $1.20, or 2.5%, in Wednesday pre-market trading. Lilly shares closed Tuesday at $53.69; while Alkermes closed at $16.66.

The results from the LAR study appear to have achieved the goals set by Amylin and Lilly, and also meet the expectations of investors. At a minimum, LAR needed to show better blood sugar control than regular Byetta. More specifically, investors were generally looking for an A1C improvement in the 1.5% to 2% range.

Amylin and Lilly say they will present the full dataset from this trial at an upcoming medical meeting.

LAR will be filed for approval with the FDA by the end of the first half of 2009, according to both companies. That's a long wait for an FDA filing -- possibly longer than expected -- but the drug is being held up by manufacturing. Amylin is still constructing an LAR manufacturing facility, so the drug can't be filed until the facility is completed.

Amylin and Lilly currently market Byetta as a twice-a-day injection for Type 2 diabetes patients. Through the first nine months of 2007, Byetta sales totaled $460 million, an increase of 57% year over year. Most analysts expect Byetta sales growth to slow due to competition from oral diabetes medicines.

But LAR, as a convenient once-weekly injection, has the potential to become a blockbuster i.e. a billion-dollar plus product. The most bullish analyst estimates project upwards of $3 billion in peak sales for the drug.
Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.