Teva has been knocked back by an FDA decision not to approve deutetrabenazine, its candidate drug for chorea associated with Huntington's disease.
The US regulator issued a complete response letter (CRL) for deutetrabenazine (SD-809) that has asked the Israeli pharma company to carry out further testing on certain metabolites seen after dosing with the drug.
Teva's drug is a 'deuterated' form of VMAT-2 inhibitor tetrabenazine - the active ingredient in Lundbeck's already-approved Xenazine product - with a modified structure that seeks to improve the safety and efficacy of the parent molecule.
Xenazine is the only approved treatment for Huntington's disease - a rare and fatal neurodegenerative disorder that affects about 1 in 7,000-10,000 people in western countries.
The product brought in around $330m in sales for Lundbeck last year, thanks to its price tag of more than $85,000 a year. 2015 sales of the product rose 30% on the prior year, although it started to face generic competition in the US in the fourth quarter.
In a statement, Teva said that the metabolites under scrutiny by the FDA are not novel, and are also seen in patients who take tetrabenazine. The company said the agency has not requested any new clinical trials, adding that it will work to allay its concerns "as quickly as possible".
It is estimated that because of tolerability issues only around 5% of eligible Huntington's disease patients in the US receive tetrabenazine treatment. In trials deutetrabenazine was associated with lower rates of depression, somnolence, insomnia and akathisia, which could expand its use in this patient population.
"We know that many people in the [Huntington's] community are waiting for this new medicine," commented Teva's chief scientific officer Michael Hayden.
"We understand there are very limited treatment options … hence we are accelerating the re-analysis process [and] plan to submit our response to the CRL in the third quarter," he added.
The metabolites issue is critical for Teva as it is also developing deutetrabenazine for other uses, notably tardive dyskinesia, a much larger indication which has no approved therapies in the US, and tics associated with Tourette's syndrome.
Teva acquired deutetrabenazine when it bought Auspex Pharma for $3.5bn in March 2015.
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