* FDA denies approval of Horizant extended-release tablets
* Concerned about pancreatic tumours in rats
* Glaxo shares flat in early trade
(Adds analyst comment, sales forecast, Glaxo shares)
LONDON/NEW YORK, Feb 18 (Reuters) - U.S. regulators have denied approval for a drug from XenoPort (XNPT.O) and GlaxoSmithKline (GSK.L) to treat restless legs syndrome because of a potential link to cancer found in rats.
The companies said they received a complete response letter from the Food and Drug Administration (FDA) regarding Horizant extended-release tablets, stating that the drug could not be approved at this time.
The agency said a preclinical finding of pancreatic acinar cell tumours in rats was of sufficient concern to preclude a green light.
XenoPort and Glaxo said in a statement they were assessing the appropriate next steps and would be communicating with the FDA. The application was originally submitted to the FDA on Jan. 9, 2009.
A verdict on the medicine had been delayed before, while FDA officials sought information on a risk evaluation programme, and analysts said the latest decision was a setback for both companies.
"The FDA's response must raise questions over the future for this product, without further significant work being carried out to clarify the risk in humans," analysts at Jefferies said in a research note.
The brokerage has been expecting peak sales for the drug of $500 million a year, making it a relatively minor driver for Glaxo at less than 1 percent of forecast group revenue in 2014.
Glaxo shares were flat in early trading on Thursday.
The uncertainty over Horizant is more significant for Glaxo's smaller partner Xenoport, which is to hold a conference call on the issue later in the day.
Horizant, which was previously known as Solzira, is a long-lasting version of gabapentin, which is approved for refractory epilepsy.
The FDA acknowledged that similar findings were known for gabapentin at the time of its approval but said the seriousness of that condition justified the potential risks.
Restless legs syndrome, however, is a less serious and non-life threatening condition for which other treatments are available. It is characterised by an irresistible urge to move the limbs due to unpleasant sensations. (Reporting by Ben Hirschler and Michael Erman; Editing by Gary Hill and Sharon Lindores)