CORRECT: Roche Diabetes Drug Faces Delay On Safety Action

Roche Holding AG (ROG.VX) Friday said new safety concerns about potential billion-dollar drug taspoglutide require deeper monitoring of patient's response to the medicine, which will push back an expected regulatory filing by as much as 18 months.

Roche said some patients in the ongoing Phase III study proved to be hypersensitive, showing skin reactions and gastrointestinal symptoms and less frequently cardiovascular and respiratory symptoms. All patients recovered without complications.

The incidence of hypersensitivity reactions was higher than expected although it remains uncommon at less than 1%, according to the company.

In a media call, Roche executive Fouzia Laghrissi Thode said Roche took the step proactively, noting the company anticipates a filing delay of 12 to 18 months at least.

She said she couldn't provide an estimate for a worst-case scenario.

Analysts said this is bad news but noted Roche's quick action, made possible by its in-house diagnostics capability, indicates the company is aware the issue needs to be taken seriously.

The drug is still very efficient, Zuercher Kantonalbank analyst Michael Nawrath said. However, the fact that may increase blood pressure is clearly a problem, according to the analyst. Nawrath expects some studies predicting between $2.5 billion to $3 billion in annual sales for taspoglutide to be revised downwards by "a quarter or a third," he added. Nawrath expects an approval for the drug in 2013 rather than in 2011.

Zuercher Kantonalbank has a market outperform rating on the stock.

On the Swiss bourse at 0900 GMT, Roche shares fell CHF3.90, or 2.5%, to CHF155 in a slightly higher market.

Roche taspoglutide is emblematic for the company's recent efforts to diversify into areas outside cancer medicines.

In April, Roche said taspoglutide showed promising results in a late phase test, raising chances the drug could live up to its blockbuster potential if it makes it to the market. It acquired exclusive worldwide rights to develop and market the drug from French drugmaker Ipsen (IPN.FR).

Roche believes the drug can become a major seller in the so-called GLP-1 drug market.

It had expected to file the medicine for approval in the U.S. and Europe by 2011.

Taspoglutide is the first once-weekly human glucagon-like peptide-1 analogue being developed to address the unmet needs of patients with a specific form of diabetes.

Roche's product would be a rival to Novo Nordisk A/S's (NOVO-B.KO) recently launched Victoza and to Byetta, the diabetes treatment developed by Amylin Pharmaceuticals Inc. (AMLN) and Eli Lilly & Co. (LLY). Numerous other drugmakers also have experimental GLP-1s in development.

Roche's setback boosted Novo Nordisk shares in early Friday trading, with the stock gaining 3.3%, or DKK16.30 to DKK505 in a slightly firmer Copenhagen market.

Company website: www.roche.com

-By Martin Gelnar, Dow Jones Newswires; [phone]; [e-mail] ([e-mail])