Experimental diabetes drug empagliflozin has run into a major obstacle, with the Food and Drug Administration (FDA) putting the pin in ongoing trials. Manufactured by Eli Lilly and Co and privately held German partner Boehringer Ingelheim, questions were raised around the facility at which the drug was to be produced.

A press release, issued Wednesday by the two companies, stated that the FDA did not ask for further clinical trials in support of the application for approval. Empagliflozin, intended for adults with Type 2 diabetes, is a type of sodium glucose co-transporter-2 (SGLT2), meaning that the drug blocks glucose re-absorption by the kidneys, hence eradicating excess glucose in the bloodstream. Empagliflozin is different from traditional diabetes drugs in that it does not depend on existing insulin levels in order to take effect. The FDA's rejection comes after a large-scale New Drug Application (NDA) process, which consisted of ten multinational clinical trials and over 13,000 test subjects.  

Despite the drug's promise, the factory facilities at Ingelheim, Germany, are said to be sub-par, with Boehringer-Ingelheim receiving a warning letter from the FDA last May concerned with the same issues of poor manufacturing standards. One such issue noted by the FDA was the presence of foreign particles in certain active ingredients, as well a lack of follow-through on the FDA's earlier recommendations (dating to 2012) to fix the facility.

Boehringer claims to be undergoing a thorough upgrade of the facilities, which includes amendments to systems and processes currently in place. The FDA is re-inspecting the factory as the companies plan to appeal the decision. Structural changes to the program include greater emphasis on internal management, including the hire of 200 specialists in quality control and manufacturing processes, as well as a broader employee training scheme.

The re-application process is expected to result in approval of empagliflozin later this year, with Alex Arfaei, an analyst with BMO Capital Markets, advising Reuters that the drug would ultimately generate revenue of $1.6 billion for Lilly per year.

Lilly shares have been up around 19 percent in the past three months, though midday trading today saw them fall 49 cents to $59.36.