UPDATE 2-Biodel diabetes drug needs new trials; shares sink

* Gets FDA’s complete response letter

* FDA asks company to conduct two new late-stage trials *
Seeks data on stability and manufacturing of drug

* Shares fall as much as 55 pct
(Rewrites, adds analyst comment, updates stock movement)

By Krishnakali Sengupta

BANGALORE, Nov 1 (BestGrowthStock) – U.S. health regulators asked
Biodel Inc (BIOD.O: ) to conduct two new late-stage trials to win
approval for its experimental diabetes drug, requiring the
company to raise substantial funding and knocking off half its
market value on Monday.

The company’s shares fell as much as 55 percent to a
52-week low after the drug, Linjeta, was denied immediate
approval.

The Danbury, Connecticut-based company said the U.S. Food
and Drug Administration issued a complete response letter,
asking it to conduct separate trials to establish efficacy in
patients with type 1 and type 2 diabetes.

JMP Securities analyst Jason Butler said the new trial for
type 1 diabetes was not a complete surprise given anomalies in
the data, but the additional trial for type 2 diabetes was
rather unexpected.

Linjeta is the second diabetes drug to fail to get
regulatory nod in two weeks, following the failure of Amylin
Pharmaceuticals’ (AMLN.O: ) high profile Bydureon, suggesting
increased FDA scrutiny over diabetic treatments.
[ID:nN20190180]

Butler expects each trial to cost the company about $15
million to $20 million, with a treatment duration of six
months.

At June 30, the company had cash, cash equivalents and
marketable securities of 23.9 million.

The analyst expects it would take the company about 18-24
months to complete the trials and resubmit the drug for
approval.

“We expect further clarity to be apparent once the company
meets with the FDA, possibly still in 2010,” Butler added.

The FDA also requested additional data related to stability
and manufacturing of the drug, formerly called VIAject.

In August, Biodel had indicated the drug could be withheld
after a regulatory warning letter to a manufacturing facility
that produced vials of the drug. [ID:nSGE67N0HT]

The company said the FDA has specified the resolution of
manufacturing issues as a requisite for approval.

The company’s shares, which have lost about 11 percent
after the FDA warning in August, were down 44 percent at $2.03
in midday trade Monday on Nasdaq.
(Reporting by Krishnakali Sengupta in Bangalore; Editing by
Unnikrishnan Nair and Vinu Pilakkott)

UPDATE 2-Biodel diabetes drug needs new trials; shares sink