UPDATED: FDA OKs AstraZeneca's long-delayed diabetes drug dapagliflozin

The FDA has handed AstraZeneca a green light to begin marketing dapagliflozin, its long-delayed SGLT2 diabetes drug, which will now try to defy the steadily dwindling expectations of market analysts. The treatment--the first new FDA drug approval for 2014--will be sold as Farxiga.

The drug had been advanced by Bristol-Myers Squibb ($BMY) and AstraZeneca ($AZN) as part of their big diabetes partnership in the wake of the $7 billion Amylin buyout. But just weeks ago, Bristol-Myers agreed to sell its side of the diabetes business to AstraZeneca for up to $4.1 billion.

The developers were stiff-armed by the agency back in 2012, which was fretting over the safety issues presented by the new class of drugs. Subsequently, Johnson & Johnson ($JNJ) won an approval for their SGLT2 drug, Invokana (canagliflozin), though it has also encountered significant skepticism related to its sales potential. And Eli Lilly ($LLY) and Boehringer Ingelheim have their own candidate up for review now.

Farxiga has been studied now in 16 clinical trials, proving its ability to flush glucose in urine, a new way to help diabetics to achieve glycemic control

"Controlling blood sugar levels is very important in the overall treatment and care of diabetes, and Farxiga provides an additional treatment option for millions of Americans with type 2 diabetes," said Dr. Curtis Rosebraugh, director of the Office of Drug Evaluation II in the FDA's Center for Drug Evaluation and Research, in a statement.

Now the big question is whether Farxiga will amount to anything, a particularly important challenge for AstraZeneca, which is in desperate need of new products. ISI's Mark Schoenebaum has trimmed his annual sales forecast from $700 million to $300 million a year--way below blockbuster status. But in the land of peak sales estimates, anything is possible. Bernstein's Tim Anderson recently speculated that AstraZeneca and Bristol would wind up splitting about $600 million. And Morningstar analyst Damien Conover is playing the bull, telling Reuters today that the bleak outlook is bunk. He's pegging peak sales at a would-be $1.5 billion a year.

AstraZeneca's shares were up about 6 cents Wednesday afternoon, which means most investors are sitting this one out. 

- here's the FDA's release