2nd UPDATE:Roche Says Diabetes Drug Better Than Merck Januvia

Roche Holding AG (ROG.VX) said Wednesday an experimental once-weekly treatment under development works better in treating a type of diabetes than Merck & Co. Inc.'s (MRK) Januvia, according to a clinical study.

The Basel-based drug company is comparing taspoglutide to Januvia and to a placebo in Phase-III studies on Type 2 diabetes, and said the drug met primary endpoints and was well-tolerated by patients taking it.

A spokesperson for Merck wasn't immediately available for comment.

Roche acquired the worldwide marketing rights, excluding Japan and France, to taspoglutide from French drugmaker Ipsen SA (IPN.FR) in 2006, in a deal that allows Ipsen to retain co-marketing rights for France if it so wishes.

Taspoglutide is injected once-weekly, which may present an advantage in being more convenient particularly for patients who don't adhere to their prescribed drugs, analysts for Bryan Garnier said.

As in a previous study, the most common side effects reported from taking taspoglutide were nausea and vomiting, Roche said.

While the data is encouraging, particularly in outdoing Januvia, taspoglutide's success hinges on whether patients can easily take it with minimal side effects, said Bank Sarasin analyst David Kaegi.

Wednesday's data "shed little light" on nausea and vomiting, which has prevented Eli Lilly & Co. (LLY) drug Byetta from gaining considerable market share, Kaegi added. He rates Roche at buy.

Health concerns are also at the core of the U.S. rollout of Novo Nordisk A/S's (NVO) Victoza, which suffered a setback when the Food and Drug Administration this spring came to a split decision on whether the drug could be marketed. The FDA's decision came amid data on a type of thyroid tumors seen in rodent studies. The FDA is expected to provide Novo with feedback on Victoza in the fourth quarter.

Roche, which also recently presented data showing taspoglutide works better in lowering blood sugar than Byetta, will be closely watched at a diabetes conference next June for effectiveness of taspoglutide per dose, side effects, and possible weight loss, Bryan Garnier said.

Analysts at German bank Sal. Oppenheim said in a recent note that Roche's taspoglutide will likely ultimately win approval from the U.S. health regulator, based on its strong effectiveness and the medical need for safe drugs to treat Type 2 diabetes.

The head-to-head survey against Januvia forms part of a host of studies Roche is carrying out to show how taspoglutide works in diabetes.

Shares in both Roche and Ipsen rose more than their sector in early trading Wednesday. At 0931 GMT, Roche was CHF1.70 higher, or up 1%, at CHF167.20 while shares in Ipsen were EUR1.45 higher, or up 3.9%, at EUR38.70. The Stoxx Europe health index advanced 0.4%.

Company Web site: http://www.roche.com

-By Katharina Bart, Dow Jones Newswires; +41 43 443 8043; katharina.bart@dowjones.com

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