Australian biotech group Metabolic Pharmaceuticals Ltd. said on Monday a clinical trial showed its new weight-loss drug was effective and free of side effects

Metabolic said its drug, AOD9604, worked by helping people burn fat, in contrast to other drugs that work by curbing appetite or limiting calorie intake.

The lack of any major side effects could give it an edge in the global $900 million weight-loss drug market over existing rivals.

Roche Holding AG’s Xenical can induce diarrhea while Abbott Laboratories’ Meridia increases blood pressure.

Major pharmaceutical companies had expressed strong interest in AOD9604, and Metabolic expected to negotiate a partnership over the next six months to get the drug to market, said vice president corporate development David Kenley said

SHEDDING KILOS

A trial of 300 patients found overweight people who took Metabolic’s drug lost on average 2.8 kilos over 12 weeks, about the same weight loss achievable with the two main existing weight-loss drugs, while patients who took a placebo lost 0.8 kg.

“The key things are that it’s showing results better than current therapeutics and, it would appear, with limited side effects. The existing therapies have some pretty messy side effects,” said ABN AMRO Morgan analyst Scott Power.

The company said weight loss was maintained through the 12-week trial, patients showed healthier cholesterol levels and improved glucose tolerance, and they shed fat around their waists.

“The aim was to prove it was at least as good as existing drugs and show additional benefits. And what we saw was better tolerability and excellent health benefits associated with it,” Metabolic Pharmaceuticals Chief Executive Chris Belyea told Reuters.

The group expects to begin phase III trials on the obesity drug in the second half of next year.

RACE TO FIGHT FAT

U.S. government statistics show nearly two thirds of U.S. adults are overweight, with half of them considered obese. And research shows 40 percent of U.S. children are overweight or at risk of becoming too heavy, leading to a higher risk of diabetes, heart disease and other problems.

Two new weight-loss drugs close to being submitted to the U.S. Food and Drug Administration for approval are Sanofi-Aventis’s Acomplia and Regeneron’s Axokine.

Metabolic found its drug was most effective on patients who took the lowest dose, 1 mg a day, and Belyea said the company may try an even lower dose in the phase III trials.

Kenley said companies with existing weight loss-drugs would be interested in Metabolic’s AOD9604 as a potential replacement for their own drugs or as a combination therapy.

“Unlike currently available treatments which rely on reducing calorie intake, this one appears to work primarily on metabolic pathways and merits further investigation,” said Louis Arrone, president of the North American Association for the Study of Obesity and a member of Metabolic’s U.S. clinical advisory panel.

Metabolic’s AOD9604 is a synthesized version of that part of the human growth hormone molecule.