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By Lewis Krauskopf and Toni Clarke

NEW YORK/BOSTON, Oct 19 (Reuters) - U.S. health regulators delayed approval of Amgen Inc's (AMGN.O) most important new drug, the osteoporosis medicine denosumab, the biotechnology company said on Monday, sending shares down nearly 2 percent.

But, importantly, regulators did not require further clinical trials before it can complete the review of denosumab as a treatment for osteoporosis -- the main market for the drug.

"I don't think it's a big deal or particularly surprising, though there had been a minority of people on Wall Street who had thought the company might get final approval," said Eric Schmidt, an analyst at Cowen & Co.

The U.S. Food and Drug Administration is seeking more information about a program to monitor the drug once on the market and plans to require a program to manage the medicine's risks. It requested updated safety data related to the drug.

"We are confident that we can quickly respond to the FDA's requests for the treatment of post-menopausal osteoporosis indication and plan to do so in the near term," Roger Perlmutter, Amgen's executive vice president of research and development, said in a statement.

The agency requested further clinical trials of the drug for use in preventing osteoporosis, a bone weakening disease. However, analysts have been more pessimistic about the prospects for that use since an advisory panel rejected the drug for prevention earlier this year.

The company said it expects a separate response from the agency on potential uses for the drug related to bone loss in cancer patients -- deflating some hopes for a ruling on those uses more quickly.

Sanford Bernstein analyst Geoffrey Porges said the drop in Amgen's shares reflects disappointment that the drug will not be approved with a broad range of indications as quickly as investors had hoped. He also noted shares had run up 5 percent over the past two weeks on anticipation of the FDA's response.

"I don't think this is a serious issue at all," Porges said. "These are issues that look very doable. It shouldn't take long to get a risk management program in place that the FDA is comfortable with."

The FDA requests came in a complete response letter issued to the company. Such letters are sent when the agency wants more information before approving products.

Analysts view denosumab, which would have the brand name Prolia, as a potential blockbuster and the key to jump-starting growth at the world's biggest biotechnology company. The twice-a-year injection is expected to compete in an $8 billion market for osteoporosis treatments.

Denosumab works differently from current medicines by targeting a protein that activates bone-destroying cells.

Schmidt expects the drug to be approved for osteoporosis by mid-2010 and is expecting next year's sales of $200 million. That is lower than the consensus estimate of about $500 million, he said.

"I believe today will be the trigger for bringing those numbers down," he said.

Amgen expects to receive a separate response for its application for denosumab for treating and preventing bone loss in breast and prostate cancer patients.

A panel of outside FDA advisers in August urged the agency to reject most of the proposed cancer uses and well as prevention of osteoporosis.

Members of the panel voiced concern about serious infections seen in some patients and unknown long-term risks. But they backed the drug for treating osteoporosis and bone loss from a type of prostate cancer therapy.

Osteoporosis affects an estimated 10 million Americans. The bone-thinning disease raises the risk of painful and debilitating spine and hip fractures.

Amgen shares fell 1.9 percent to $60.16 in morning trading on Nasdaq.

(Reporting by Lewis Krauskopf, Toni Clarke and Lisa Richwine, editing by Dave Zimmerman)

Wyeth has a big vaccine and biologics business that is not facing the same patent pressures, because it is much more complicated and cost-prohibitive to make generic versions of such drugs. So a merger would add diversity and bring stability to Pfizer’s drug sales.

Still, because much of Pfizer and Wyeth’s portfolios overlap, there is potential to save billions of dollars through cutting duplicative costs, analysts say.

“If Pfizer and Wyeth combine sales forces and other operations, they will have a sleeker cost structure,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, told The Times. “Most other large companies have cut just everything they can. The only way to come up with new cuts without endangering their future is to merge in a way that creates redundancies that give the companies new job-cutting opportunities.”

Of course, it remains an open question whether mergers in the pharmaceutical industry work at all. Pfizer is itself a product of a series of mergers, with mixed results. It bought Warner-Lambert, which owned Lipitor, for more than $90 billion in stock in 2000 and three years later bought Pharmacia for stock valued at $60 billion.

“Pfizer’s tried it before, and it really hasn’t worked with other firms,” Edward Hughes, who teaches pharmaceutical business at the Kellogg School of Management at Northwestern University, told The Times.

Pharmaceutical companies may also feel the need to be more diversified beyond prescription drugs. A Pfizer-Wyeth alliance would be one way for Pfizer to re-enter the consumer health business. Wyeth owns brands like Advil and Centrum vitamins. In 2006, Pfizer sold its consumer business — which included household names in the United States like Sudafed, Listerine, Nicorette and Lubriderm — to Johnson & Johnson, which because of that acquisition has managed to weather the financial storm better than its rivals.

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