FDA experts to scrutinize diet pill

NEW YORK (CNNMoney.com) -- Sanofi's diet drug Zimulti could become its next big blockbuster - if it survives FDA scrutiny over reports of suicide risks.

The diet drug Zimulti from Sanofi-Aventis (down $0.27 to $45.23, Charts) is already available in 10 European countries, and well as other countries including Mexico. Now the French pharmaceutical maker is trying to get the pill approved by the Food and Drug Administration for the U.S. market.

Advisers for the FDA will vote at a Wednesday meeting on whether the drug merits approval as a weight-loss drug for the obese. This non-binding vote will be taken into consideration by the FDA during its review process later on.

Analysts tend to be bullish on Zimulti, also known as rimonabant and Acomplia, partly because the drug has also been studied for diabetes and smoking cessation. This opens the possibility for wider use in the future, assuming that the FDA approves Zimulti for all types of treatment.

Chris Schott, analyst for Bank of America, in a note published June 7, forecast that annual sales for the drug will exceed $3 billion by 2011. Schott wrote that he expects Sanofi "to build a database supporting the product's efficacy beyond obesity (i.e., diabetes) over time."

But Sanofi could have its hands full getting Zimulti on the market just for its first indication: obesity. The FDA published documents Monday that acknowledged suicide risks. The FDA documents said that while there were no suicides in 20-milligram dose safety studies of Zimulti, there was an increase in suicidal thoughts among patients.

Schott said he believes Zimulti will win a green light from the FDA and enter the U.S. market in late July, "despite a conservative and increasingly unpredictable FDA." But Schott said the regulatory process remains the chief risk to Zimulti.

The drug was already hit with a regulatory road bump in February 2006. Sanofi was trying to get it approved as a smoking cessation drug and the FDA answered with an "approvable letter" requesting more studies and information.

This is not an ideal time for a drugmaker to be going before the FDA because the agency is dealing with an uproar over drug safety. Years after approving the diabetes drugs Avandia from GlaxoSmithKline (up $0.68 to $52.25, Charts) and Actos from Takeda Pharmaceuticals, the agency intends to impose bold warnings on the products' drug labels.

FDA commissioner Andrew von Eschenbach announced these plans during Congressional testimony last week, after a report from Cleveland Clinic chief cardiologist Dr. Steven Nissen was published in the New England Journal of Medicine blaming Avandia for heightened risk of heart attack.

In a report published prior to the Monday documents, Schott wrote that "the current environment of the FDA is a risk to our thesis that Acomplia [Zimulti] will receive a near-term approval."

Assuming Zimulti is approved, the drug faces competition from Abbott's (down $0.03 to $54.26, Charts, Fortune 500) Meridia and Roche's over-the-counter Xenical.

The two diet drugs on the U.S. market make up just a small part of the $40 billion weight-loss industry. In 2006, Meridia sales totaled $345 million worldwide, including $60 million in the U.S. Roche does not break out individual sales for Xenical, but over-the-counter sales are generally small.

Schott does not own stock in Sanofi, but Bank of America has conducted non-investment related business for the company in the last 12 months.