UPDATE 2-Labopharm appeals FDA's tramadol decision

(Adds company comments)

TORONTO, Oct 15 (Reuters) - Labopharm Inc (DDS.TO) said on Monday it had started a formal appeal process with the U.S. Food and Drug Administration in a bid to reverse the agency's decision on its once-daily formulation of the painkiller, tramadol.

"Sometimes the best way to bring things to conclusion is to do it through the formal process. We have chosen this process because we obviously believe that we have an opportunity to prevail," President and Chief Executive James Howard-Tripp, told Reuters.

"We believe that we have fully demonstrated that we have a safe and effective drug and therefore have asked the agency to approve it," he said.

Howard-Tripp said this is also the quickest method for eventual approval, noting that the process takes place in 30-day cycles.

Late in May, Montreal-based Labopharm received a second approvable letter from the FDA, which said its once-daily tramadol formula would not be approved until certain conditions were met.

The company said at the time that it was possible the agency would require additional data before the drug could be approved.

Howard-Tripp would not pinpoint where the differences lie, but hinted that it centered on the testing methods.

"The agency has chosen as its preferred method of statistical analysis, an approach that was certainly not on the table during the time that we were developing the product," he said.

"One of the things that the FDA process is meant to do is not allow that kind of thing to happen. You reach agreements on what you are going to do. If you meet it you should get approved. Obviously this is a strong basis for appeal."

He said if Labopharm receives approval by the end of the year, tramadol could see a market date of mid-2008.

But investors did not appear overly confident that there would be a quick resolution to the process. Labopharm shares were down 15 Canadian cents, or 9.9 percent, at a 52-week low of C$1.36.

"We are clearly oversold and very clearly undervalued," said Howard-Tripp. "People want to see a positive result, so it is waiting for news."

($1=$0.98 Canadian)