FDA tentatively approves Merck's copycat of Sanofi's Lantus (July 20)

(Corrects to "follow-on biologic" from "biosimilar" in paragraphs 1, 6 and 9; removes reference to "biosimilar" throughout the story)

July 20 (Reuters) - Merck and Co Inc said on Thursday the U.S. Food and Drug Administration (FDA) tentatively approved its follow-on biologic version of French drugmaker Sanofi SA's blockbuster diabetes treatment, Lantus.

Merck's copycat, if launched, would challenge Lantus as a cheaper alternative that could chip away at the drug's sales, which reached 5.71 billion euros ($6.6 billion) last year and represented over a sixth of Sanofi's total sales.

Though the FDA said Merck's product was similar enough to Lantus to justify approval, the agency's final greenlight is subject to the resolution of a patent infringement suit brought by Sanofi against the U.S. drugmaker.

The litigation, filed in September, triggered a stay on final FDA approval for up to 30 months, unless a court rules in favor of Merck earlier. After Lantus's U.S. patent expired in 2015, Sanofi had hoped to revive diabetes drug revenue that had declined due to pricing pressure and competition, by launching a follow-on product called Toujeo in March that year. Toujeo raked in 649 million euros in sales last year.

Eli Lilly & Co's Lantus follow-on biologic, Basaglar, won tentative FDA approval in August 2014 but litigation brought by Sanofi delayed final approval to December 2016. Lilly agreed to pay Sanofi royalties as part of the settlement.

Basaglar generated $86.1 million in sales last year.

U.S. pharmacy benefit manager CVS in August said it would drop Lantus from the list of medicines it reimburses on behalf of health insurers, dealing a blow to the French drugmaker's diabetes business.

Merck's Lantus follow-on biologic, called Lusduna Nexvue, is being developed with funding from South Korea's Samsung Bioepis, and delivers insulin in a pre-filled dosing device.

Both Lantus and Lusduna Nexvue, administered via injection, are long-acting, man-made versions of human insulin.

Shares of Merck were up 0.8 percent at $63.11 in afternoon trading, while Sanofi's New York-listed stock was up 3 percent.

($1 = 0.8600 euros) (Reporting by Tamara Mathias in Bengaluru; Editing by Sai Sachin Ravikumar)