Amylin Pharmaceuticals (NASDAQ:AMLN) announced mixed messages from the FDA yesterday. The agency approved its pen device for delivering its diabetes drug SYMLIN, but rejected its application to increase SYMLIN's label to include patients using basal insulin.

The introduction of the prefilled syringe should make the drug more user-friendly and increase sales, but my guess is that the label expansion would have helped increase sales far more than an easier injection system ever could. SYMLIN is currently approved for use in patients that take mealtime insulin, but the expanded label would have allowed it to market the drug to more patients.

Expanding the treatment population might have enabled the company to get a marketing agreement from one of the bigger players in the diabetes market -- perhaps insulin maker Novo Nordisk (NYSE:NVO), or Eli Lilly (NYSE:LLY), which markets Amylin's other diabetes drug, BYETTA.

The FDA rejection is a bit surprising, given the rather stellar study results released last year. In the clinical trial, one in four patients taking SYMLIN achieved the composite set of goals -- including glucose control, insulin use, and weight loss -- compared to less than 10% taking basal insulin alone.

Amylin is keeping quiet about the contents of the "not approvable" letter and says only that it will initiate discussions with the FDA to clarify the issues. Unfortunately, that's not a lot for investors to go on, but I'd guess it has to do with the FDA being worried about the risks versus rewards of the drug, as the agency did with the first approval. Basal insulin users haven't progressed as far as mealtime users, so the FDA may be worried about SYMLIN's use in patients that aren't as bad off.

If I'm right, and the FDA rejection was due to safety issues, that wouldn't bode well for Amylin's plans to develop the active ingredient in SYMLIN as a weight-loss drug. Sure, the drug promotes weight loss, but if it can't be approved for diabetics, Amylin might also have problems getting it approved for use in obese patients. Investors might not have to wait too long to learn the answer -- results from a phase 2 trial are expected later this year, which should give a glimpse into the safety of the drug in obese patients.

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