UPDATE 2-AtheroGenics shares up on postive interim drug data

(Adds analyst comments, conference call details, updates share movement)

By Niveditha Ravi

BANGALORE, April 14 (Reuters) - AtheroGenics Inc (AGIX.O: Quote, Profile, Research) said an interim analysis of a late-stage study of its failed heart-drug, AGI-1067, showed a reduction in blood sugar levels in patients with diabetes, sending its shares up over 20 percent.

The interim analysis of 806 patients in the ongoing Phase 3 ANDES trial showed dose-related statistically significant reductions in A1c, a key blood sugar measure, after three months of dosing.

The trial is evaluating two doses of AGI-1067 -- 75 mg and 150 mg -- given once daily over six months to patients with Type 2 diabetes. The main goal is an improvement in A1c at six months compared with a dummy drug.

"While efficacy is modest, we believe it is adequate given the high unmet need in diabetes if safety is not an issue. However, the safety profile is concerning given the FDA's low tolerance for liver safety issues," said Morgan Stanley analyst Steven Harr.

AtheroGenics said there has been one case of elevated liver enzymes greater than five times the upper limit of normal in each of the drug arms, although without increases in bilirubin, whose elevated levels in the body may be indicative of liver disorders.

Last November, AtheroGenics had discontinued a 300 mg dose of the drug in the ANDES trial on concerns about adverse effects on the liver as seen in the ARISE trial where AGI-1067 had failed as an experimental heart drug.

In the ARISE trial, the drug, which was developed in partnership with AstraZeneca Plc (AZN.L: Quote, Profile, Research), had failed to show a difference from placebo in a composite goal which combined a group of measures like rates of death, heart attack, stroke and others.