New safety issues to delay Novartis's Galvus

ZURICH, Nov 6 (Reuters) Novartis AG has found new liver safety problems with high doses of its diabetes medicine Galvus, delaying the key drug's path to market in Europe and raising further questions over its future.

The Swiss group said today it would seek a revision of prescribing recommendations before launching Galvus in Europe, pushing it further behind Merck&Co Inc's recently launched once-daily treatment Januvia.

Morgan Stanley cut its Galvus sales forecasts to 0 million annually from 1.03 billion dollars, reducing its long-term earnings per share forecasts by about 1 percent.

Novartis shares fell 0.1 percent and lagged the higher Swiss blue-chip index.

''One has to question how Novartis will successfully position Galvus relative to Merck's Januvia,'' Morgan Stanley analysts said in a note.

''Januvia is a true once daily medication, with an apparently clean side effect profile and has already gained FDA (approval), thus providing it with a 3 year advantage,'' Morgan Stanley said.

Data showed patients taking 100 milligram doses of Galvus once daily had more frequent liver enzyme elevation when compared to those taking 50 mg per day or 50 mg twice daily, Novartis said.

Novartis has proposed changing recommendation to use of once- or twice-daily 50 mg doses, rather than the single higher dose, and will also discuss the data and recommendations with other regulators.

FALLING BEHIND COMPETITION Galvus, which works in a similar way to Merck&Co's Januvia, has been approved for use in the European Union but Deutsche Bank analyst Michael Leuchten estimated its EU launch could be delayed by three to six months as the label is finalised.

''Although the 'fix' of using a lower dose of Galvus seems simple enough, it means that Novartis has a smaller pool of patient data at the dose it wants to market,'' said Denise Anderson, analyst at Landsbanki Kepler.

''In our view this increases the difficultly of gaining U.S.

approval. In addition, a liver safety signal may hurt sales potential,'' Anderson said.

Separate skin toxicity worries have also put back Galvus's approval in the United States, where Novartis aims to resubmit the drug in 2009.

Merck's big lead means Novartis will probably be at a disadvantage when its drug is finally approved in the United States, the world's biggest drugs market, analysts say.

Both Galvus and Januvia are so-called DPP-4 inhibitors, which are designed to enhance the body's own ability to lower elevated blood sugar and could become an important new way to control type 2 diabetes, the most common form of the disease.

The manufacturers and many analysts believe DPP-4 drugs could become blockbusters because they are not associated with weight gain, a major side effect of some established diabetes drugs.

Reuters SS GC1715