UPDATE 2-Takeda to delay European application for key drug

* To delay European application until 2012

* Will conduct additional two-year study

* Takeda shares fall 1.3 percent

By Yumiko Nishitani

TOKYO, June 4 (Reuters) - Japan's Takeda Pharmaceutical (4502.T) said it would delay seeking European approval of a key diabetes drug candidate to 2012 from the original target of this year, to conduct an additional study -- a second major setback for the drug.

The delay for alogliptin, also known as SYR-322 and which Takeda has positioned as its successor to its top-selling drug Actos, comes after U.S. regulators said they wanted more data for their review.

"The delay in Europe is not a surprise," said Yo Mizuno, pharmaceuticals analyst at Daiwa Research Institute.

"It has been largely expected as a delay in the United States of one to two years has become the market consensus."

The study is separate to an additional study planned for the U.S. market, a Takeda spokesman said but he added that the drugmaker has not given up hope of the U.S. Food and Drug Administration granting approval by the current June 26 deadline.

The decision to conduct another study was taken without prompting from European regulators, he said.

With alogliptin, which belongs to a new class of diabetes drugs called DPP-4 inhibitors, Japan's largest drugmaker aims to to compete with Merck & Co's (MRK.N) Januvia, the only DPP-4 on the U.S. market.

Other rival drug candidates, which work through the same mechanism of action, are also in advanced stages of development.

Actos accounts for roughly a quarter of Takeda's revenues and will lose U.S. patent protection in 2011.

Takeda said it to ensure alogliptin is approved in Europe it would conduct an additional two-year 2,500-patient study, comparing its safety to glipizide, a much older generically available diabetes medicine when used in combination with another generic drug metformin.

Takeda's shares fell 1.3 percent to 3,760 yen, underperforming a 0.5 percent decline in the Nikkei benchmark average .N225.

The FDA's request for more data in March gave rise to fears that the drug might be delayed by years and sent Takeda's shares plummeting to 3,320 yen, their lowest in 10 years. [ID:nT239013] (Additional reporting by Taiga Uranaka; Editing by Edwina Gibbs)