Nearly two years after the FDA issued what was the first of two rejections, the agency has finally approved the Bydureon diabetes treatment, setting up what is going to be heated battle between Amylin Pharmaceuticals, which will market the drug, and Novo Nordisk, which sells a rival medicine called Victoza. Both drugs are part of the GLP-1 class of diabetes medications (read the FDA letter).

The approval was largely expected, given that Amylin had labored to appease the agency, which asked the drugmaker last fall - when the second of two complete response letters was issued - to conduct an additional study over concerns that Bydureon may cause heart rhythms. The initial rejection, which was made in April 2010, was over risk management and manufacturing issues.

The FDA endorsement now sets for the stage for what will be a very closely watched race in the diabetes market. Bydureon is a longer-acting version of Byetta and, thanks to technology developed by Alkermes, which receives a royalty on Bydureon sales, the Almylin drug can be injected just once a week. By contrast, the Novo Nordisk drug Victoza must be injected daily.

ISI Group biotech analyst Mark Schoenebaum notes that the label looks very similar to Victoza: it has a Black Box for medullary thyroid cancer, and is not approved for first line or insulin combo use, unlike Byetta. In addition, FDA has also approved a Victoza-like REMS.” For the moment, he expects annual Bydureon pricing of about $4,200 compared with approximately $5,000 for high-dosage Victoza (Here is the labeling). And the sales effort begins in March.

The run-up to the approval, by the way, has been characterized by a pair of rather interesting developments. Amylin, for instance, went to court last year to end a development and marketing deal with Eli Lilly for both Bydureon and Byetta. The split ended a fractious, decade-long partnership that unraveled when Lilly signed a deal with Boehringer Ingelheim, which infuriated Amylin executives.

Lilly, by the way, not only received $250 million to seal the divorce, but also gets a $150 milestone payment for the FDA approval, as well as a 15 percent royalty on global sales until a $1.2 billion note has been repaid to the big drugmaker. And the note carries a hefty 9.5 percent annual rate (read more here and here).

Meanwhile, Novo Nordisk was busy preparing for the Bydureon approval, as well. Earlier this month, the drugmaker signed Paula Deen, the self-styled ‘Queen of Southern Cuisine’ and Food Network star, as a spokesperson. However, it was not until the announcement that Deen disclosed that she had Type 2 diabetes for the past three years, all the while cooking and promoting the sort of dishes that can worsen diabetes. Deen was harshly criticized, and a debate erupted over whether Novo Nordisk was cynical and hypocritical for choosing Deen to promote its medicines (see this and this).

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