LONDON U.S. drug regulators need further clinical data, possibly including new clinical studies, before approving a new diabetes drug from AstraZeneca and Bristol-Myers Squibb.
The two companies said on Thursday they had received a so-called "complete response letter" from the Food and Drug Administration (FDA) for dapagliflozin as a treatment for type 2 diabetes in adults.
The news is a setback for both drugmakers, compounding other recent pipeline disappointments in cancer for Bristol, and both cancer and depression for AstraZeneca.
The two partners said they remained committed to dapagliflozin and its development but the FDA decision further dims prospects for the once-a-day drug, which is seeking to compete in an already well-supplied diabetes market.
"The drug has had little support from diabetes experts and the diabetes field is already crowded with a host of different therapeutic options, many of which are now available generically," Bernstein analyst Tim Anderson said in a research note.
Shares in AstraZeneca, which is struggling to find new drugs to replace a wave of those going off patent, fell 1.2 percent by 0900 GMT, underperforming a flat European drugs sector.
Stock in Bristol, which has a smaller established sales base and has been more aggressive in talking up prospects for dapagliflozin, fell 6 percent in trading in Germany.
Hopes for dapagliflozin have dwindled since July, when an FDA panel of outside experts voted against recommending approval over concerns about cancer risks and liver injury. The panel said at the time it did not think clinical data provided enough certainty about the drug's safety.
FDA staff have been pondering dapagliflozin's future since then. Regulators have become more cautious about new diabetes drugs following a past controversy over GlaxoSmithKline's Avandia, which was linked to heart risks.
The agency was originally due to decide on dapagliflozin in October but the deadline was then pushed back to January 28.
Analyst expectations for the medicine have fallen as a result of its rocky ride in the world's top market and forecasts for annual dapagliflozin sales stand, on average, at a modest $426 million by 2015, according to Thomson Reuters Pharma.
Savvas Neophytou of Panmure Gordon said he still had hopes for the drug, given its potential to be the first that treats diabetes independent of insulin.
"To us, this product either becomes multi-billion (dollar) or it never sees the light of day in the market," he said.
Dapagliflozin belongs to a new class of diabetes drugs designed to allow more sugar to be excreted with urine. People with diabetes have inadequate blood sugar control.
But in a two-year study nine people taking the drug got bladder cancer and nine got breast cancer out of 5,478 patients treated. The FDA advisers in July also worried about how effective the drug would be in the elderly, many of whom have kidney problems.
AstraZeneca and Bristol said they remained in discussions with the health authorities in Europe and other countries about their applications to market the drug.
(Reporting by Ben Hirschler; Editing by Greg Mahlich and Hans-Juergen Peters)