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* FDA demands new study on Tresiba's cardiovascular safety
* Novo CEO "surprised and disappointed"
* $2.8 bln consensus sales forecast for 2017 set to fall
* Setback is positive for Sanofi's rival product Lantus
* Novo shares tumble 12.5 percent, Sanofi gains 4.5 percent (Adds sales forecasts in paragraph 13, detail on diabetesmarket)
By Mette Fraende
COPENHAGEN, Feb 11 (Reuters) - U.S. regulators refused toapprove Novo Nordisk's new long-acting insulinTresiba until it conducts extra tests for potential heart risks,dealing a major blow to a key product for the Danish drugmaker.
Shares in Novo, the world's leading insulin maker and themost valuable company in the Nordic region, slumped 12.5 percentas it said the decision would make it harder to meet long-termfinancial targets. Rival insulin producer Sanofi rose4.5 percent.
At one stage, Novo shares were down as much as 17 percent onMonday, their biggest daily decline since 2002.
As the world suffers from an epidemic of type 2 diabetestied to over-eating and lack of exercise, demand for treatmentshas snowballed. Novo has benefited more than any other companybecause it is so focused on diabetes, lifting its shares to alofty premium over other European drugmakers.
Novo said the U.S. Food and Drug Administration (FDA) hadrequested additional data from a trial focused on cardiovasculareffects before it would consider approving Tresiba and relatedproduct Ryzodeg.
The drugmaker, which is banking on Tresiba to keep it in thelead in diabetes care, said late on Sunday it could not providethe data in 2013 and Chief Scientific Officer Mads Thomsen latertold Reuters it would not be ready in 2014 either.
"It is a really bad situation," said Sydbank analyst SorenHansen, who expects a delay of two or three years.
Tim Anderson of Bernstein said the best that Novo could nowhope for was that Tresiba made it to market in 2015, assumingthe new trial enrolls patients quickly and the FDA requires onlypartial data and not full completion.
Waiting for all the data could delay approval to 2017 or2018, he said, and if the study reveals new risks it may neverbe approved.
Thomsen said he hoped to start talks with the FDA this weekto find out exactly what data it required and how long a newstudy might take.
The setback for Tresiba, also known as degludec, is goodnews for rival makers of insulin medicines, notably France'sSanofi, whose Lantus product is threatened by Novo's newerultra-long-lasting treatment.
Most investors had expected a green light from the U.S.watchdog, following a positive recommendation from an advisorypanel to the FDA last November, despite earlier signals thatthere might be heart issues with the medicine.
Optimism about Tresiba and Ryzodeg - which combines degludecwith another formulation of insulin - was further boosted byapproval in Europe, where both drugs won a final go-ahead lastmonth. They have also been approved in Japan.
CONFOUNDS EXPECTATIONS
Analysts had been expecting Tresiba and Ryzodeg to sell some$2.8 billion annually by 2017, according to consensus forecastscompiled by Thomson Reuters Pharma. Those numbers look set tofall sharply, since the lucrative U.S. market was seen making upmore than half of the total.
Novo Chief Executive Lars Sorensen said the U.S. setbackwould have no impact on the group's plans for the roll-out orpricing of the drugs in Europe and Japan.
The FDA's decision to issue Novo with a so-called "completeresponse letter" confounded expectations. Such letters areissued when the U.S. agency determines that an applicationcannot be approved in its existing form.
"We are surprised and disappointed to receive this letter,but we acknowledge this decision by the FDA and will work withthe agency to determine the best path forward to completing thereview," Sorensen said.
Novo received the letter on Feb. 8 but only made it publicon Sunday.
In fact, concerns about the cardiovascular safety of Tresibaare not a complete surprise, although Novo and most analysts hadthought the issue had been resolved.
The FDA advisers' meeting last year expressed concern abouta trend toward higher incidence of adverse heart events with thenew insulin than with older ones. However, the differences seenin 16 large clinical trials were not statistically significant.
In addition to calling for new trials on Tresiba's heartsafety, the FDA said approval for Tresiba and Ryzodeg could notbe granted until violations cited in a Dec. 12 warning letterhad been resolved.
The FDA is very cautious about the safety profile of newdiabetes treatments, following controversy overGlaxoSmithKline's Avandia pill, which was linked toserious heart problems after being on the market for years.
Novo said the FDA's decision not to grant approval at thepresent time was not expected to impact its financial forecastssignificantly for the current year.
The big concern of investors, though, is that a lengthydelay in getting Tresiba launched in the world's biggest drugsmarket will seriously undermine Novo's ability to stay ahead ofrivals such as Sanofi and Eli Lilly.
Mark Clark of Deutsche Bank said the setback would be seenas "unequivocally good news" for Sanofi's long-acting insulinLantus, which is the French company's biggest-selling product,with sales this year expected to reach some $6.6 billion, 62percent of which will come from the United States. ($1 = 0.7474 euros) (Additional reporting by Ben Hirschler and Ole Mikkelsen;Editing by Dale Hudson and Mark Potter)
