Eli Lilly (NYSE:LLY) and Boehringer Ingelheim Pharmaceuticals said today that the Food and Drug Administration rejected empagliflozin, the most recent drug to come out of the companies' diabetes partnership.

As rejections go, this one is pretty minor.

The FDA apparently observed deficiencies at the Boehringer Ingelheim manufacturing plant where empagliflozin is made and won't approve the drug until they're cleared up. The companies didn't say exactly what needed to be corrected, but it could be related to this lengthy FDA warning letter from last May.

Most importantly, the FDA isn't requiring the companies to run additional clinical trials to get empagliflozin approved like it did AstraZeneca (NASDAQ:AZN) and Bristol-Myers Squibb's Forxiga. It took the companies two years to gather the data and get Foxiga approved earlier this year. AstraZeneca bought out Bristol-Myers Squibb's portion of their partnership, so it's now the full owner of Forxiga and the rest of their diabetes drugs.

Empagliflozin and Forxiga are inhibitors of sodium glucose co-transporter-2, or SGLT2, designed to inhibit the reabsorption of sugar by the kidney back into the bloodstream. The sugar is instead excreted in the patients' urine.

In addition to Forxiga, Eli Lilly will have to compete with Johnson & Johnson's (NYSE:JNJ) SGLT2 Invokana if empagliflozin is approved. In its fourth-quarter earnings report in January, Johnson & Johnson characterized Invokana sales as "strong" but didn't break out the actual sales  figures.

As a new class of drugs with a different mechanism of action, SGLT2 inhibitors are appealing because they can be used in conjunction with other diabetes medication. Last year, Merck (NYSE:MRK) and Pfizer (NYSE:PFE) teamed up to develop a combination product containing Merck's blockbuster Januvia and Pfizer's SGLT2 inhibitor ertugliflozin, an experimental drug in phase 3 trials.


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