UPDATE 2-EU approves Novartis diabetes drug Galvus

(Adds detail on Merck’s Januvia, shares)

ZURICH, Feb 1 (Reuters) - European authorities have approved Novartis's NOVN.VX drug Galvus as a new oral treatment for type 2 diabetes patients, paving the way for launches in Europe, the Swiss company said on Friday.

“The European Commission approved Galvus for use in combination with some of the most frequently prescribed oral anti-diabetes medicines -- metformin, sulphonylureas (SU), or thiazolidinediones (TZD),” Novartis said.

The move had been expected. Novartis received a positive opinion from European health authorities in December on Galvus after it made changes to prescribing recommendations following liver safety concerns.

Shares in Novartis were 0.9 percent higher at 55 Swiss francs by 0855 GMT, broadly in line with a firmer European drugs sector.

Delays in Galvus, which had been expected to garner over $1 billion in sales before the safety issues became apparent, were among a series of setbacks Novartis suffered in 2007.

The company said two weeks ago that it would focus on launching Galvus in Europe as the U.S. Food and Drug Administration (FDA) had asked for a large new clinical trial. It had “stepped back” from developing Galvus in the United States, its head of pharmaceuticals Joe Jimenez said.

“Galvus is not recommended for patients with liver impairment, and liver monitoring should be conducted at the start of treatment, every three months for the first year, and periodically thereafter,” Novartis added.

Galvus is also not recommended for patients with moderate or severe renal impairment or congestive heart failure and should not be used in patients with type 1 diabetes.

Galvus is a DPP-4 inhibitor, designed to boost the body’s ability to lower elevated blood sugar. Such drugs offer a new way of treating type 2 or maturity onset diabetes, the most common form of the disease.

It will compete with Merck & Co Inc's MRK.N Januvia, which has a significant head start, since it is already on the market.

Analysts’ forecasts for Galvus have fallen steadily since February 2007, when the FDA asked for more data before approval, and many models now discount U.S. sales entirely. (Reporting by Sven Egenter, editing by David Cowell)