US drug major Eli Lilly suffered a setback on Friday, after US regulators issued an approvable letter for its diabetic eye disease candidate Arxxant, potentially adding a substantial delay to its entry onto the market.

The US Food and Drug Administration has asked for additional clinical data to support the drug's inital application, although it has not yet been determined whether this will require Lilly to carry out a further clinical study.

Arxxant (ruboxistaurin mesylate) is a first-in-class oral therapy for the treatment of moderate-to-severe non-proliferative diabetic retinopathy. It works by limiting the over-activation of a naturally-occurring enzyme linked to the development of the condition.

The drug was once tipped as a blockbuster medication for Lilly, but had its sales forecasts scaled down after failing to demonstrate efficacy in peripheral neuropathy, another common complication of diabetes.

Lilly recently signed a co-promotion deal for Arxxant with opthalomogy group Alcon in the USA and Puerto Rico, a move applauded by analysts who noted that this complication of diabetes is usually handled by eyecare specialists, so the pairing should give Lilly a foothold into the market.

Shares in the group dipped 1.6% to close at $55.03 on the New York Stock Exchange.