UPDATE 3-Acomplia pulled from EU market in blow to Sanofi

* EU drugs agency recommends suspension of Acomplia approval * Agency sees doubling of risk of psychiatric disorders * Sanofi to take charge in Q4, impact less than 50 mln euros * Sanofi shares erase earlier large gains

(Adds detail on clinical trials)

By Ben Hirschler

LONDON, Oct 23 (Reuters) - European authorities said on Thursday Sanofi-Aventis's (SASY.PA) anti-obesity drug Acomplia should be withdrawn from sale over links to mental disorders, dealing a blow to the French drugmaker and hitting its shares.

Acomplia had once been seen as Sanofi's biggest new drug hope but the medicine has been dogged by controversy and was refused marketing clearance in the United States last year after being associated with depression and suicidal thoughts.

The European Medicines Agency said it had concluded that the benefits of Acomplia no longer outweighed its risks, and there was an approximate doubling of the risk of psychiatric disorders in obese or overweight patients taking Acomplia versus placebo.

It said doctors should not issue any prescriptions for Acomplia and patients taking the drug should consult their doctor or pharmacist to discuss their treatment.

The decision will have a minimal impact on Sanofi's bottom line -- but it is a setback for the credibility of the company and its outgoing Chief Executive Gerard Le Fur, who is about to be replaced by GlaxoSmithKline (GSK.L) executive Chris Viehbacher.

Sanofi said it would comply with the request for a temporary suspension and would work with healthcare professionals in this process. But the group reiterated its belief that Acomplia could bring significant benefits to obese and overweight patients.

The company said it intended to continue with late-stage Phase III trials of the drug as a treatment for type 2 diabetes, involving thousands of patients, since independent experts had not recommended that these studies be stopped.

SURPRISE

Analysts had already slashed their forecasts for Acomplia following the drug's setback in the United States but the European action still caught investors off guard.

"It is a surprise because it has been used now in 700,000 patients and the company claims its profile in the real-world setting is identical to that outlined in the original regulatory submissions," said Evolution Securities analyst Peter Cartwright.

"It's probably another example of regulators moving ever further in the direction of safety."

Shares in Sanofi erased earlier sharp gains following the news.

The stock ended virtually unchanged on the day at 45.7 euros having been as much as 5 percent higher at 47.67 euros earlier following a broad move by stock market investors into pharmaceuticals.

Acomplia, known generically at rimonabant, was once touted as a multibillion-dollar seller, but sales in the first nine months of 2008 were only 81 million euros.

Sanofi said it would take a charge of less than 50 million euros ($64.25 million) in the fourth quarter to write off stocks of the medicine but added the move would not affect is financial guidance for 2008.

Acomplia is the first in a new class of drugs that switch off the same brain circuits that make people hungry when they smoke cannabis.

Merck & Co (MRK.N) decided earlier this month to halt development of a similar experimental drug, called taranabant, after data in a late-stage clinical study found more side effects at higher doses. (Editing by David Cowell)