* European Medicines Agency recommends Onglyza
* New DPP-4 drug a rival for Merck's Januvia
* Bristol shares up 3 percent, Astra gains 1.5 percent
(Adds shares, further detail)
By Ben Hirschler
LONDON, June 25 (Reuters) - European regulators have recommended approval of Onglyza, a new diabetes drug from AstraZeneca Plc and Bristol-Myers Squibb Co, clearing the way for its launch in the coming months.
Recommendations from the European Medicines Agency are normally endorsed by the European Commission within two or three months.
The two companies said on Thursday that their drug had won a positive opinion for type 2 diabetes from the agency's experts as an as add-on therapy used alongside the older medicines metformin, thiazolidinedione or sulphonylurea.
Onglyza is AstraZeneca's first new drug since cholesterol fighter Crestor went on sale in 2003 and the Anglo-Swedish drugmaker hopes it will carve out substantial sales by competing against Merck & Co Inc's blockbuster Januvia.
Januvia sold $1.4 billion worldwide in 2008.
Both Onglyza and Januvia drugs aim to enhance the body's ability to lower elevated blood sugar levels and are part of a class of drugs known as dipeptidyl peptidase-4 (DPP-4) inhibitors.
Even though there are numerous diabetes therapies on the market, some can cause weight gain or other complications and many patients are still not reaching optimal blood sugar levels, creating an opportunity for new treatments.
In the United States, AstraZeneca and Bristol-Myers hope to get approval by July 30 for Onglyza, which is also known by the chemical name saxagliptin.
The medicine won backing from a U.S. advisory panel in April but the Food and Drug Administration delayed its target for making a decision on whether to approve it by three months from the original date of April 30.
Another drug in the DPP-4 class, Novartis AG's Galvus, has been delayed by concerns about skin lesions.
Shares in Bristol-Myers rose 3 percent, while AstraZeneca added 1.5 percent in U.S. trading. (Editing by Dan Lalor)