The Food and Drug Administration staff on Friday said the injectable drug, called Arcalyst, was meant to be used for only 16 weeks to prevent gout flares - the first treatment for the condition with such a limited timeline.

Shares of Regeneron, the maker of eye drug Eylea, fell 2.4 percent to $130.75 in morning trading on Nasdaq, underperforming the broader market.

The FDA staff review comes ahead of an advisory panel of outside experts, which will vote on whether to recommend the drug next Tuesday. The FDA will make a final decision by July 30, taking into account the panel's recommendations.

Regeneron's drug, known generically as rilonacept, is already approved to treat a group of rare genetic auto-inflammatory diseases. But the small biotech company is hoping to expand its use to prevent gout flares in people starting uric acid-lowering therapy.

Gout is a painful condition that occurs when the bodily waste product, uric acid, is deposited in the joints and soft tissues. It affects about 5 million to 6 million Americans.

While there are already treatments for gout flares in general, none exist specifically for people who are starting therapy to lower their uric acid, and none is meant to be used for only 16 weeks, the FDA staff said.

"From an efficacy standpoint, it will be important to address whether 16 weeks provide for an adequate duration for flare prophylaxis during initiation of (uric acid-lowering therapy)," the staff said, according to documents posted online on Friday.

The FDA staff also said Regeneron's drug, which is an injectable biologic, suppresses the immune system, which could increase the number of cancerous cells. Six people treated with Arcalyst during clinical trials developed malignancies, or cancerous cells that could spread, compared to zero for those taking a dummy drug during the trials.

However, the FDA staff said the treatment duration of 16 weeks was relatively short, making it less likely the drug caused tumors - though the imbalance between Arcalyst and placebo still raised concerns.

(Reporting by Anna Yukhananov; Editing by Gerald E. McCormick, Dave Zimmerman)

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