UPDATE 5-Amylin, Lilly diabetes drug falls short of Novo's

* Study compared Bydureon with Novo's Victoza

* Bydureon failed to meet main goal of study

* Amylin shares tumble more than 24 pct

* Partner Alkermes off 12 pct; Lilly up 0.6 pct

* Novo shares rise 1.3 percent (Adds background on Bydureon, updates share prices)

By Lewis Krauskopf

NEW YORK, March 3 (Reuters) - A long-awaited experimental diabetes medicine from Eli Lilly & Co (LLY.N) and Amylin Pharmaceuticals Inc (AMLN.O), that patients need to inject only once a week, failed to match a rival treatment taken daily, sending Amylin shares tumbling more than 24 percent.

Lilly, Amylin and partner Alkermes Inc (ALKS.O) released results of the study on Thursday comparing their once-weekly Bydureon injection to Novo Nordisk A/S's (NOVOb.CO) Victoza, which is injected daily. Bydureon is a longer-acting version of Byetta, another drug sold by Lilly and Amylin.

Bydureon failed to meet the primary goal of proving it was as effective as Victoza, according to the 26-week, 900-patient study.

The drugs belong to a new class of therapies that not only control blood sugar levels, but can prompt weight loss, a benefit because obesity is a leading cause of diabetes and some older medicines can spur weight gain. More than 220 million people worldwide suffer from diabetes.

Bydureon has already faced repeated delays. Last October, U.S. regulators asked for more data on potential heart risks before approving the medicine.

"It obviously adds risk to a program that was already risky," Hapoalim Securities analyst Jon LeCroy said of the latest study results. "They've had so many setbacks for this program; it's just one more hit."

LeCroy said the latest study could make it tougher for Bydureon to win U.S. approval as the FDA appears increasingly to be weighing a drug's effectiveness compared with already approved medicines. He noted that Bydureon had stacked up well against other drugs in earlier trials.

Lilly shares were up 0.6 percent at $34.48 at mid-afternoon, although they were slightly underperforming rival drug stocks. Alkermes fell 12 percent. Shares of Danish drugmaker Novo rose 1.3 percent.

VICTOZA'S ADVANTAGE

Patients receiving Bydureon saw a reduction in A1C -- a common measure of blood sugar -- of 1.3 percentage points from their baseline levels. That compared with a 1.5 percentage-point reduction for Victoza patients.

Rates of nausea and vomiting were lower for Bydureon, which is also known as exenatide once-weekly, but analysts viewed the results as disappointing for the product.

"For marketing, you're trying to go as low as possible," LeCroy said. "The Victoza sales reps can go in there and say: 'Look, they did their own head-to-head trial, and it showed our drug is better.'"

With Victoza on track for at least a two-year head start in the U.S. market, the study "is likely to have significant commercial implications," JP Morgan analyst Cory Kasimov said in a research note.

The study, known as Duration-6, is the sixth study comparing Bydureon to other medications for controlling Type-2 diabetes. Bydureon and Victoza are both in the class of medicines known GLP-1 receptor agonists, which stimulate insulin production in order to regulate blood sugar levels.

Bydureon has been viewed as crucial to sustaining the franchise started by Byetta.

BioMedTracker had projected Bydureon sales reaching $2.2 billion by 2018, if the drug reached the market, but analysts said their estimates for the drug may come down now.

As Amylin's most promising product, Bydureon's fate comprises a huge amount of its value.

The drug is relatively less important although still a significant medicine for Lilly, which sells a broader range of products. The study was more bad news for the Indianapolis-based drugmaker, which has endured a litany of research and other setbacks and faces the U.S. patent expiration of its top-selling Zyprexa anti-psychotic in October.

The U.S. Food and Drug Administration declined to approve Bydureon in October pending more data on its potential effect on heart rates. That followed a delay in March 2010.

Amylin said in January that the application would be resubmitted to the FDA in the second half of this year, and the agency's review would probably take up to six months.

The Duration-6 results keep up the momentum for Novo, whose shares have soared more than 70 percent in the past year, helped by the fast start for Victoza.

Victoza may also see competition down the road from rival medicines such as GlaxoSmithKline Plc's (GSK.L) Syncria and Sanofi-Aventis' (SASY.PA) lixisenatide, said Sanford Bernstein analyst Jack Scannell.

"It's very clear there are going to be more GLP-1s but I think Victoza probably has a marketing advantage for the foreseeable future," Scannell said.

Novo Chief Executive Lars Sorensen told the Reuters Health Summit in November that Victoza sales could reach $2.5 billion a year later this decade. [ID:nN09112825] (Reporting by Lewis Krauskopf; Additional reporting by Bill Berkrot and Ben Hirschler in London; Editing by Michele Gershberg, Dave Zimmerman, Tim Dobbyn and Richard Chang)