Ipsen and licensing partner Roche have announced plans to launch a late-stage trial of their investigational diabetes drug taspoglutide which could rival Amylin Pharmaceuticals’ Byetta.

The move into Phase III comes on the strength of Phase II data presented by Roche at the American Diabetes Association meeting in San Francisco on taspoglitude, a glucagon-like peptide-1 (GLP-1) analogue. The figures from the 306-patient trial showed that the once-weekly drug improved glucose and weight loss after just eight weeks of treatment. Roche and Ipsen added that the safety profile of taspoglitude was good with the most common side effect being mild-to-moderate nausea.

Ina joint statement, Roche’s pharma chief William Burns and Ipsen chief executive Jean-Luc Belingard said that taspoglutide “has the potential to be a best-in-class treatment”. They noted GLP-1 analogues, which stimulate insulin secretion and suppress glucagon secretion, “are true innovations in the diabetes field” and the data to date certainly merits the move into Phase III.

Roche exercised its licensing option for taspoglutide from the French drugmaker in 2006 and acquired exclusive worldwide rights to develop and market the drug, except in Japan where rights are shared with Teijin and in France where Ipsen may elect to retain co-marketing rights.

The news led in part to yet another fall in shares of Amylin, which developed the the only GLP-1 drug currently on the market, Byetta (exenatide). The treatment, which is co-marketed with Eli Lilly, is given by injection twice a day and while Amylin is also developing a longer-lasting version of its drug to be administered once a week, analysts are concerned whether it can maintain its leadership position.

These concerns are based on the prospects for taspoglitude as well as Novo Nordisk’s investigational once-daily jab liraglutide. The Danish firm has presented promising data at the ADA which showed that liraglutide provided better control of blood glucose levels than Byetta and analysts at Jefferies & Co downgraded Amylin amid fears of future competition.

Amylin shares ended the day down 10.3% to $26.84.