UPDATE 1-Takeda says to drop development of cholesterol drug

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TOKYO, March 28 (Reuters) - Takeda Pharmaceutical Co Ltd (4502.T), Japan's biggest drug maker, on Friday dropped development of a cholesterol-lowering drug candidate that had once been seen as one of its most promising medicines.

The move had been expected after U.S. authorities recommended late last year that Takeda halt higher dose trials of the drug, known as TAK-475, on safety concerns, and company executives said little to dispel worries about its development prospects.

TAK-475 was one of three drug candidates Takeda had hoped would become a big earner to offset expected profit declines after its mainstay diabetes drug Actos loses U.S. patent protection in 2011.

It has since filed applications with U.S. authorities seeking approval for the other two -- SYR-322, which belongs to a new class of diabetes treatments, and TAK-390MR, a successor to heartburn and ulcer drug Prevacid.

Takeda said in a statement that it had cancelled development after deciding that TAK-475 was not superior to existing drugs in efficacy or safety.

The U.S. Food and Drug Administration recommended last October that Takeda halt higher dose trials of TAK-475 after elevated levels of an enzyme that may indicate liver damage were more often found than in control groups.

The news sent Takeda's shares plunging 12 percent the next day to 7,060 yen. The stock has since dropped another 28 percent to 5,100 yen, slightly underperforming a 23 percent slide in the pharmaceutical subindex .IPHAM.T.

TAK-475 is a squalene synthase inhibitor, a type of cholesterol-lowering drug that has not yet been brought to market.

Had it been approved, it would have competed against Merck & Co. Inc's (MRK.N) and Schering-Plough Corp's SGP.N Zetia and Vytorin. (Reporting by Edwina Gibbs)