* Panel recommends rejection of Durolane in 6-1 vote
* FDA usually follows panel advice
* Companies say will work to win approval (Adds panelist, FDA, analyst and company comment)
GAITHERSBURG, Md., Aug 19 - A U.S. advisory panel urged regulators on Wednesday to reject a proposed injection to treat knee pain from Q-Med AB QMED.ST and Smith & Nephew (SN.L) (SNN.N).
The Food and Drug Administration panel, in a 6-1 vote, recommended against approval of the Durolane injection for arthritis patients. The vote makes it unlikely the product will win approval as the FDA usually follows panel advice.
Committee members who opposed approval said they were not convinced that a Q-Med study comparing Durolane to a steroid injection provided enough evidence to conclude the experimental product was effective.
"There were just too many holes in the study," said Dr. Sanjiv Naidu, an orthopedic surgeon at Pinnacle Health System in Pennsylvania.
Durolane is a gel that contains hyaluronic acid, a substance that cushions and lubricates joints.
Swedish company Q-Med manufacturers Durolane while London-based Smith & Nephew distributes and markets the product. It is approved in parts of Europe as well as in Canada and Indonesia, according to Q-Med.
Wells Fargo Securities analyst Michael Matson said hyaluronic acid products make up about 3 percent of Smith & Nephew's revenue as part of its clinical therapies business. The company sells a knee-pain treatment called Supartz, given in three to five injections, which has been facing competition this year from Genzyme Corp's GENZ.O single injection Synvisc-One.
Matson said he estimated about $261 million in 2010 sales for Smith & Nephew's clinical therapies segment, but that may be $18 million too high if Durolane fails to win U.S. approval.
Q-Med is seeking FDA clearance for the product to treat arthritis patients who have not found enough relief through pain-relieving drugs such as acetaminophen or other methods.
Officials from both companies argued to the panel that Q-Med's data supported approval. In the most recent study, researchers compared knee pain among 433 patients who were randomly assigned to receive either Durolane or an injected steroid called methylprednisolone.
Similar levels of pain relief were seen in both groups 12 weeks after treatment, Q-Med said.
FDA staff who spoke to the panel criticized Q-Med's studies, saying the first two showed no difference in pain relief between patients who received Durolane compared to others given saline injections. For the third, which measured the drug against the steroid, the agency "has clinical and statistical concerns with the study design," FDA reviewer Kyung Lee said.
The agency questioned if the steroid was an appropriate comparison and if it was active 12 weeks later when it was measured against Durolane.
The panel meeting "provided some very useful and valuable feedback," Ken Reali, a Smith & Nephew senior vice president, said in a statement after the vote.
"We intend to work with our Q-Med partners and the FDA to initiate the next steps in making this highly successful global product available to U.S. patients," Reali said.
Q-Med Chief Executive Bengt Agerup said the company remained "committed to our goal of providing U.S. physicians and patients access" to Durolane.
Shares of London-based Smith & Nephew closed up 2.2 percent on the New York Stock Exchange after the news. Before the panel vote, shares of Swedish company Q-Med fell 1.2 percent on the Stockholm Exchange. (Reporting by Lisa Richwine, editing by Matthew Lewis and Carol Bishopric)