UPDATE 2-US not ready to approve Lilly's long-acting Zyprexa

(Adds Lilly statement)

WASHINGTON, Jan 7 (Reuters) - U.S. regulators have delayed a final decision on whether to approve Eli Lilly and Co's LLY.N long-acting form of its blockbuster schizophrenia drug Zyprexa, a Food and Drug Administration spokeswoman said on Wednesday.

The FDA has sent a “complete response” letter to Eli Lilly, FDA spokeswoman Sandy Walsh said. The agency issues complete response letters to companies when it is not ready to approve a drug. It does not publicly disclose what steps are needed to win approval.

Lilly later said that the agency would not require any additional clinical trials, signaling that an approval decision might not be delayed for too much longer.

“Per the agency’s request, Lilly is preparing a proposed Risk Evaluation and Mitigation Strategy (REMS), which will be submitted in the near future,” Lilly said in a statement.

“We cannot speculate on the timing of a potential decision,” it added.

Lilly said in May it had received favorable signals from regulators despite an earlier “not approvable” decision and expected long-acting Zyprexa to become available in the United States in the “near future.”

It is already approved in Europe.

Lilly now sells Zyprexa as a once-a-day pill, plus a short-acting injection for acute agitation.

The company aims to sell the long-acting injection under the name Zyprexa Adhera. It would be given every two or four weeks.

The basic form of Zyprexa had 2007 sales of $4.8 billion, but it will lose U.S. patent protection in 2011 and faces competition from cheaper generics. Although the long-acting formulation would have years more of patent life, some analysts have said it has limited sales potential because it would be largely geared to hospitalized patients. (Additional reporting by Bill Berkrot in New York) (Reporting by Lisa Richwine, editing by Tim Dobbyn, Richard Chang)