June 26 (Bloomberg) -- Sanofi-Aventis SA slumped the most in seven months in Paris trading after analysts cut their recommendations on the drugmaker’s stock because of concern that its Lantus diabetes treatment carries health risks.

Morgan Stanley’s Andrew Baum lowered the stock to “equal- weight” from “overweight,” and reduced his 12-to-18-month price forecast to 48 euros a share from 58 euros. Alexandra Hauber of JPMorgan Chase & Co. cut Sanofi to “neutral” from “overweight.” The shares lost 8.1 percent, the most since November.

Studies of U.K. patients to be published “in major medical journals may well identify an increased risk of cancer in Lantus-treated patients,” Baum wrote in a report today. He wasn’t available for further comment.

Sales of Lantus, Sanofi’s third-biggest-selling drug, helped first-quarter earnings beat analyst estimates. The Paris- based company is counting on Lantus to offset revenue declines caused by generic competition to other drugs. Lantus, part of a class of drugs known as insulin analogs, probably will make up a third of profit by 2013, according to UBS AG.

Sanofi fell 3.60 euros to close at 40.85 euros. The shares fell yesterday after a UBS AG report cited “recent market questions on the safety of insulin analogs in undisclosed studies.” The two-day drop knocked 7.7 billion euros ($10.8 billion) off Sanofi’s market value.

DeFronzo’s Comments

Concern over Lantus was stoked by Ralph DeFronzo, a diabetes researcher at the University of Texas Health Science Center, on a June 11 conference call sponsored by Credit Suisse, UBS analysts said yesterday. He predicted an “earthquake” event that might prompt doctors to not “feel so comfortable with glargine” insulin, according to a transcript of the call. Glargine is a chemical name for Lantus. He didn’t provide details.

DeFronzo didn’t return calls yesterday and today to his office in San Antonio. An assistant said DeFronzo was out of the country and not reachable.

Clinical studies covering more than 70,000 patients as well as research since the drug went on the market “confirm the safety profile of Lantus,” Sanofi said yesterday.

“The clinical evidence in our possession shows the efficacy and the tolerance of Lantus,” Geoffroy Bessaud, a Sanofi spokesman, said by telephone today. “At this stage it is impossible for us to comment further in the absence of data on which the rumors are based.”

Competing Treatments

“Sanofi’s scripted response to questions on Lantus suggests to us there are likely material issues at hand,” Morgan Stanley’s Baum wrote.

Lantus is a long-acting, injectable form of insulin that is used to control the blood sugar level in diabetics, who have difficulty producing insulin naturally. The drug, approved for sale in the U.S. in 2000, was the first once-a-day form of insulin. An injection steadily releases insulin into the blood over 24 hours.

Regulators have known since at least the 1990s about a possible link to cancer from insulins, said Jack Scannell, an analyst at Sanford C. Bernstein & Co. in London.

“Clearly this issue was scrutinized around the time of Lantus getting approved,” he said in a phone interview. “It’s perfectly plausible as an effect but I’d be surprised if the effect was that big.” He has an ‘‘underperform” rating on Novo Nordisk A/S, the world’s biggest insulin maker.

If there is a risk, it may apply to other long-acting insulins such as Novo Nordisk’s Levemir, he said.

‘Rumor-Mongering’

Novo Nordisk Chief Science Officer Mads Krogsgaard Thomsen said the company’s products are safe and that he wasn’t aware of any imminent publication of data on insulin analogs.

“I don’t want to be associated with any rumor-mongering at all,” Thomsen said in a telephone interview. “The only thing I can talk to is about the safety of our products. We feel that our insulins are very safe therapies and are well proven.”

Novo has strict policies in place to screen out any compounds that show the potential to spur cells to divide and multiply, which can lead to cancer, he said. Novo shares fell 10.50 kroner, or 3.7 percent, to close at 270 kroner in Copenhagen.

Diabetes affects 23.6 million people in the U.S., according to the American Diabetes Association.

Competing diabetes treatments include Byetta, marketed by Eli Lilly & Co. of Indianapolis and San Diego-based Amylin Pharmaceuticals Inc. DeFronzo was an investigator on a company- sponsored study of Byetta, also known as exenatide, which stimulates the body to produce more insulin. Amylin shares surged $1.18, or 9.4 percent, to $13.77 at 12:06 p.m. in Nasdaq Stock Market trading.

‘Negative Headlines’

“Negative headlines from a publication in a major medical journal could substantially damage the Lantus franchise,” JPMorgan’s Hauber wrote in her report today. “A worst-case scenario is difficult to quantify before seeing the data.”

Lantus was Sanofi’s fastest-growing drug last year, with sales up 28 percent from the previous year, the company said on Feb. 11. Lantus sales reached 2.45 billion euros ($3.45 billion) in 2008, or 9.9 percent of the company’s net pharmaceutical revenue.

The French drugmaker said in February 2008 it aimed to make the medicine the world’s top diabetes treatment by 2015, overtaking Takeda Pharmaceutical Co.’s Actos. Lantus, the world’s No. 1 insulin, takes second place to Actos in the $23 billion diabetes market.

Chief Executive Officer Chris Viehbacher, who joined Sanofi in December, has handled controversy over a diabetes treatment before. He was the public face of his former employer, GlaxoSmithKline Plc, in the debate over the Avandia diabetes drug, doing media interviews and speaking at regulatory hearings. Avandia lost sales after a report of heart risks in 2007.

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Last Updated: June 26, 2009 12:32 EDT